# EDGAR Filing Document

**Accession Number:** 0001451448
**File Stem:** 0001493152-23-001480
**Filing Date:** 2023-1
**Character Count:** 894550
**Document Hash:** b691a63b03a40427d2cf31699fa077c9
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001493152-23-001480.hdr.sgml**: 20230113

**ACCESSION NUMBER**: 0001493152-23-001480

**CONFORMED SUBMISSION TYPE**: S-1

**PUBLIC DOCUMENT COUNT**: 139

**FILED AS OF DATE**: 20230113

**DATE AS OF CHANGE**: 20230113

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** ESPORTS ENTERTAINMENT GROUP, INC.
- **CENTRAL INDEX KEY:** 0001451448
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-AMUSEMENT & RECREATION SERVICES [7900]
- **IRS NUMBER:** 263062752
- **STATE OF INCORPORATION:** NV
- **FISCAL YEAR END:** 0630

**FILING VALUES:**
- **FORM TYPE:** S-1
- **SEC ACT:** 1933 Act
- **SEC FILE NUMBER:** 333-269241
- **FILM NUMBER:** 23529743

**BUSINESS ADDRESS:**
- **STREET 1:** BLOCK 6, TRIQ PACEVILLE
- **STREET 2:** ST. JULIANS STJ 3109
- **CITY:** MALTA
- **STATE:** O1
- **ZIP:** BKR 9077
- **BUSINESS PHONE:** 356 2757 7000

**MAIL ADDRESS:**
- **STREET 1:** BLOCK 6, TRIQ PACEVILLE
- **STREET 2:** ST. JULIANS STJ 3109
- **CITY:** MALTA
- **STATE:** O1
- **ZIP:** BKR 9077

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** VGambling Inc.
- **DATE OF NAME CHANGE:** 20150402

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** VGambling, Inc.
- **DATE OF NAME CHANGE:** 20140815

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** DK Sinopharma, Inc.
- **DATE OF NAME CHANGE:** 20100615

?xml version="1.0" encoding="utf-8"?

**Registration No. _________**

**As filed with the Securities and Exchange Commission on January 13, 2023.**

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM S-1**

**REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933**

**ESPORTS ENTERTAINMENT GROUP, INC.**

(Exact name of registrant as specified in its charter)

---

| | | |
|:---|:---|:---|
| **Nevada** | **7900** | **26-3062752** |
| (State or other jurisdiction of incorporation of organization) | (Primary Standard Industrial<br> Classification Code Number) | (I.R.S. Employer<br> Identification Number) |

---

**Block 6, Triq Paceville**

**St. Julians** **, Malta, STJ 3109**

**+356** **2713-1276** 

*(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)*

**State Agent and Transfer Syndicate**

**112 North Curry St**

**Carson City, Nevada 89703**

**(775) 882-1013**

*(Name, address, including zip code, and telephone number, including area code, of agent for service)*

Approximate date of commencement of proposed sale to the public: **As soon as practicable after the effective date of this Registration Statement.**

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ <br> Non-accelerated filer ☒ Smaller reporting company ☒ <br> Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

**The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.**

**The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.**

**PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED JANUARY 13, 2023**

![](forms-1_002.jpg)

**ESPORTS ENTERTAINMENT GROUP, INC.**

**[●] Shares of Common Stock**

**___________________________**

We are offering [●] shares of Esports Entertainment Group, Inc. common stock, par value $0.001, on a firm commitment basis at an assumed public offering price of $[●] per share (based upon the last reported sale price of our common stock on the Nasdaq Capital Market on [●], 2023).

We have granted the representatives of the underwriters an option to purchase up to an additional [●] shares of our Common Stock from us at the public offering price, less the underwriting discounts and commissions, within 45 days from the date of this prospectus to cover over-allotments, if any.

The offering is being underwritten on a firm commitment basis. The actual public offering price per share of common stock will be determined between us and the representative of the underwriters at the time of pricing, and may be at a discount to the current market price for our common stock. Therefore, the assumed public offering price used throughout this preliminary prospectus may not be indicative of the final offering price.

Our Common Stock presently trades on the Nasdaq Capital Market under the symbol "GMBL." On [●], 2023, the last reported sale price of our Common Stock was $[●] per share.

We currently have two classes of Common Stock Purchase Warrants that trade on the Nasdaq Capital Market under the symbols "GMBLW" and "GMBLZ."

Our Common Stock Purchase Warrants that have an exercise price of $4.25 per share and expire in April 2025 trade under the symbol GMBLW and, on [●], 2023, the last reported sale price of our GMBLW warrants was $[●] per warrant.

Our Common Stock Purchase Warrants that have an exercise price of $1.00 per share and expire in March 2027 trade under the symbol GMBLZ and, on [●], 2023, the last reported sale price of our GMBLZ warrants was $[●] per warrant.

**Investing in our common stock involves a high degree of risk. You should carefully read and consider the "<u>Risk Factors</u>" on page S-11 of this prospectus.**

**The information in this prospectus is not complete and may be amended or supplemented from time to time. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and we are not soliciting an offer to buy these securities, in any state where the offer or sale is not permitted.**

**Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.**

---

| | | |
|:---|:---|:---|
|  | **Per Share** | **Total** |
| Public offering price | $| $|
| Underwriting discounts and commissions | $| $|
| Proceeds, before expenses, to us | $| $|

---

Delivery of the shares of common stock is expected to be made on or about [●], 2023 through the facilities of The Depository Trust Company.

The date of this prospectus is [●], 2023

**MAXIM GROUP LLC**

**Table of Contents**

---

| | |
|:---|:---|
| [Cautionary Statements Regarding Forward-Looking Information](#s_001) | S-1 |
| [Summary](#eeg_001) | S-2 |
| [Risk Factors](#eeg_002) | S-11 |
| [Use of Proceeds](#eeg_004) | S-40 |
| [Capitalization](#eeg_024) | S-40 |
| [Dilution](#eeg_006) | S-40 |
| [Underwriting](#eeg_025) | S-41 |
| [Description of Capital Stock](#eeg_008) | S-44 |
| [Description of Securities](#a_000000004) | S-48 |
| [Description of Business](#eeg_010) | S-48 |
| [Legal Proceedings](#eeg_011) | S-56 |
| [Market for Common Equity and Related Stockholder Matters](#eeg_012) | S-56 |
| [Management Discussion and Analysis of Financial Condition and Results of Operations](#eeg_014) | S-57 |
| [Changes In and Disagreements with Accountants](#Naresh_001) | S-68 |
| [Management](#eeg_016) | S-68 |
| [Disclosure of Commission Position of Indemnification for Securities Act Liabilities](#ar_001) | S-70 |
| [Executive Compensation](#eeg_017) | S-71 |
| [Outstanding Equity Awards at Fiscal Year-End](#a_000000001) | S-74 |
| [Compensation of Directors](#a_000000002) | S-75 |
| [Security Ownership of Certain Beneficial Owners and Management](#t_001) | S-76 |
| [Certain Relationships and Related Transactions](#a_000000003) | S-77 |
| [Available Information](#eeg_019) | S-78 |
| [Dealer Prospectus Delivery Obligation](#eeg_020) | S-78 |
| [Financial Statements](#eeg_013) | F-1 |
| [Information Not Required In the Prospectus](#eeg_022) | II-1 |
| [Signatures](#eeg_023) | II-6 |

---

S-i

**CAUTIONARY NOTE REGARDING FORWARD-LOOKING INFORMATION**

The information included or incorporated by reference into this prospectus contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or Exchange Act. These forward-looking statements that relate to future events or 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 differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, "believe," "expect," "anticipate," "estimate," "intend," "plan," "targets," "likely," "aim," "will," "would," "could," and similar expressions or phrases identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and financial needs. Actual results may differ materially from those expressed or implied in such forward-looking statements as a result of various factors. We do not undertake, and we disclaim, any obligation to update any forward-looking statements or to announce any revisions to any of the forward-looking statements, except as required by law. Certain factors that could cause results to be materially different from those projected in the forward-looking statements include, but are not limited to, statements about:

● our ability to regain and subsequently maintain compliance with the continued listing requirements of Nasdaq;

● our history of accumulated deficits, recurring losses and negative cash flows from operating activities;

● we may be unable to achieve or sustain profitability or remain a going concern;

● the amount and terms of our indebtedness and our inability to restructure such debt to sustainable levels or on satisfactory terms;

● litigation or legal proceedings involving the Company;

● any statements of the plans, strategies and objectives of management for future operations;

● any statements concerning proposed new products, services or developments;

● any statements regarding future economic conditions or performance;

● our ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of others;

● our estimates regarding the sufficiency of our cash resources and our need for additional funding; and

● our intended use of the net proceeds from the offering of shares of common stock under this prospectus.

We urge you to consider these factors before investing in our securities. The forward-looking statements included in this prospectus and any other offering material, are made only as of the date of the prospectus or any other offering material. For more detail on these and other risks, please see "*Risk Factors*" in this prospectus, our Annual Report on Form 10-K for our fiscal year ended June 30, 2022 filed with the Securities and Exchange Commission, or SEC, on October 13, 2022, and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 filed with the SEC on November 14, 2022.

**TRADEMARKS AND COPYRIGHTS**

We own or have rights to trademarks or trade names that we use in connection with the operation of our business, including our corporate names, logos and website names. In addition, we own or have the rights to copyrights, trade secrets and other proprietary rights that protect the content of our products and the formulations for such products. This prospectus may also contain trademarks, service marks and trade names of other companies, which are the property of their respective owners. Our use or display of third parties' trademarks, service marks, trade names or products in this prospectus is not intended to, and should not be read to, imply a relationship with or endorsement or sponsorship of us. Solely for convenience, some of the copyrights, trade names and trademarks referred to in this prospectus are listed without their©,® and™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our copyrights, trade names and trademarks. All other trademarks are the property of their respective owners.

**ABOUT THIS PROSPECTUS**

**You should rely only on the information that we have provided in this prospectus and any applicable prospectus supplement. We have not authorized anyone to provide you with any different information. This prospectus is an offer to sell only the securities offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. The information in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or any sale of our common stock.**

As used in this prospectus, the terms "we," "us," the "Company," "EEG," "Esports" and "Esports Entertainment Group" mean Esports Entertainment Group, Inc.

**PROSPECTUS SUMMARY**

*The following information below is only a summary of more detailed information included elsewhere in this prospectus and should be read together with the information contained in other parts of this prospectus and adjoining materials, including our financial statements. This summary highlights selected information about us and this offering. This summary may not contain all of the information that may be important to you. Before making a decision to invest in our securities, you should read carefully all of the information contained in this prospectus, including the information set forth under the caption "Risk Factors."*

**About Esports Entertainment Group, Inc.**

**Overview**

Esports is a skill-based, competitive, and organized form of video gaming by professional players, playing individually or as teams. Esports typically takes the form of organized, multiplayer video games that include genres such as real-time strategy, fighting, first-person shooter and multiplayer online battle arena games. Most major professional esports events and a wide range of amateur esports events are broadcast live via streaming services including twitch.tv and youtube.com. The Company is developing a wagering platform where players and fans alike may engage in peer-to-peer skill-based betting, and gamers can bet on their ability to beat other gamers in a betting exchange environment and fans and spectators have the ability to bet on their favorite gamers to win real cash and prizes.

**Corporate History**

Esports Entertainment Group, Inc. was formed in the state of Nevada on July 22, 2008 under the name Virtual Closet, Inc., before changing its name to DK Sinopharma, Inc. on June 6, 2010 and then to, VGambling, Inc. on August 12, 2014. On or about April 24, 2017, VGambling, Inc. changed its name to Esports Entertainment Group, Inc.

The Company is a diversified operator of iGaming, traditional sports betting and esports businesses with a global footprint. The Company's strategy is to build and acquire iGaming and traditional sports betting platforms and use them to grow the esports business whereby customers have access to game centers, online tournaments and player-versus-player wagering. On July 31, 2020, the Company commenced revenue generating operations with the acquisition of LHE Enterprises Limited, a holding company for Argyll Entertainment ("Argyll"), an online sportsbook and casino operator. On January 21, 2021, the Company completed its acquisition of Phoenix Games Network Limited, the holding company for the Esports Gaming League ("EGL"), and provider of event management and team services, including live and online events and tournaments. On March 1, 2021, the Company completed the acquisition of the operating assets and specified liabilities that comprise the online gaming operations of Lucky Dino Gaming Limited, a company registered in Malta, and Hiidenkivi Estonia OU, its wholly owned subsidiary registered in Estonia (collectively referred to as "Lucky Dino"). On June 1, 2021, the Company acquired ggCircuit, LLC ("GGC") and Helix Holdings, LLC ("Helix"). GGC is a business-to-business software company that provides cloud-based management for gaming centers, a tournament platform and integrated wallet and point-of-sale solutions. Helix owned and operated esports centers that were disposed of on June 10, 2022, as the Company exited the physical sites. From the Helix acquisition, the Company retained its core esports programming and gaming infrastructure and remains focused on its core esports offerings. On July 13, 2021, the Company completed its acquisition of Bethard Group Limited the online casino and sports book business operating under the brand of Bethard ("Bethard"). Bethard's business-to-consumer operations provides sportsbook, casino, live casino and fantasy sport betting services.

**Our Business**

EEG is an esports-focused iGaming and entertainment company with a global footprint. EEG's strategy is to build and acquire betting and related platforms, and lever them into the rapidly growing esports vertical. We operate the business in two verticals, EEG iGaming and EEG Games.

**EEG iGaming:**

EEG iGaming includes the esports betting platform with full casino and sportsbook functionality and services for iGaming customers. iDefix, proprietary technology acquired in connection with the acquisition of Lucky Dino, is a Maltese Gaming Authority ("MGA") licensed iGaming platform with payments, payment automation manager, bonusing, loyalty, compliance and casino integrations that services all Lucky Dino sites along with SportNation.com and Vie.bet. In addition, our other in-house gambling software platform, Phoenix, is a modern reimagined sportsbook that caters to both millennial esports bettors as well as traditional sports bettors. Phoenix is being developed through the assets and resources from our acquisition of FLIP Sports Limited, a software development company ("FLIP").

EEG's goal is to be a leader in the large and rapidly growing sector of esports real-money wagering, offering fans the ability to wager on professional esports events in a licensed and secure environment. From February 2021, under the terms of our MGA license, we are now able to accept wagers from residents of over 180 jurisdictions including countries within the European Union, New Zealand and Latin America, on our ''Vie.bet'' platform.

Alongside the Vie.bet esports focused platform, EEG owns and operates:

● Lucky Dino, which is licensed by the MGA to offer five online casino and sportsbooks under its seven different brands on its in-house built iDefix casino-platform, and

● The recently acquired Bethard online sportsbook and casino brands, operating under MGA, Spanish, Irish and Swedish licenses.

We currently hold four Tier-1 gambling licenses (Malta, Ireland, Spain and Sweden). Our Lucky Dino and Bethard operations provide a foothold in mature markets in Europe into which we believe we can cross-sell our esports offerings.

**EEG Games:**

EEG Games' focus is on providing esports entertainment experiences to gamers through a combination of: (1) our proprietary infrastructure software, GGC, which underpins our focus on esports and is a leading provider of local area network ("LAN") center management software and services, enabling us to seamlessly manage mission critical functions such as game licensing and payments, (2) online tournaments (through our EGL tournament platform), and (3) player-vs-player wagering. Currently, we operate our esports EEG Games business in the United States and Europe.

We believe that as the size of the market and the number of esports enthusiasts continues to grow, so will the number of esports enthusiasts who gamble on events, which we believe will increase the demand for our platform.

**Competition**

The online gambling and wagering industry is increasingly competitive. With relatively low barriers to entry, new competitors are entering the esports wagering and video game tournament segments. In both of these segments, there currently exist several major competitors. Most of EEG's current competitors, including bet365, William Hill, Betway, Penn Entertainment, Inc. (NASDAQ:PENN), Pinnacle Sports, PointsBet Holdings Limited (OTC: PBTHF), DraftKings Inc. (NASDAQ:DKNG), Rush Street Interactive, Inc. (NYSE:RSI), Kindred Group plc, Flutter Entertainment plc, Betsson AB, Super Group (SGHC) Limited (NYSE:SGHC), 888 Holdings plc, and Entain Plc, have far greater resources than us.

However, we believe the following strengths position us for sustainable growth:

***Management Team and Key Personnel Experience***:

EEG's Board of Directors includes senior managers with extensive experience in online gambling, esports, information technology, compliance, regulation, accounting and finance.

EEG's officers and management, including our recently hired Chief Executive Officer, include individuals with extensive experience in online gambling, esports, information technology, marketing, business development, payment processing, compliance, regulation, accounting, finance and customer service.

***Unique Positioning within online gaming:***

EEG was one of the first online gaming companies with an esports-first focus and a line of esports businesses; leading the effort to broaden legislation for betting on esports competitions. We are uniquely focused on connecting to customers across a broad set of retail and digital businesses to achieve greater revenue, scale, and profitability, as well as shaping esports infrastructure to facilitate omni-channel betting.

***Technology Assets:***

● EEG has acquired businesses with state-of-the-art business-to-business/business-to-consumer technologies across esports competition infrastructure, for in-person and internet-based competitions, for tournaments, esports wagering and skill-based betting.

● GGC Proprietary Platform: GGC's ggLeap cloud-based management software solution enables Gaming Centers to run games through the stat integrated client, reward gamers for playing the games they love, and allow gamers to run their own local tournaments. GGC is currently used by over 600 LAN centers and connects with over 2 million gamers monthly.

● Lucky Dino's online casino platform – iDefix, a modern online casino platform licensed in Malta, upon which the Lucky Dino's online casino brands operate. iDefix provides a full technical solution for casino operations, with various management tools as well as in-depth business intelligence reporting and analysis. The technology is built on a scalable event-driven micro-services-based architecture offering advanced automation features including anti money laundering compliance and know your customer ("KYC") handling, responsible gambling management and monitoring, fraud and bonus abuse detection, as well as gamification, customer relationship management and bonus management.

**Growth Strategy**

In the future, we intend to:

● Expand our esports services into more of the 45 states where skill-based gambling is legal, enhance our product offering, as well as create relationships with players that will migrate into our Vie.gg real-money wagering platform.

● Expand our esports wagering services into more jurisdictions, utilizing the MGA gaming license, which provides opportunity for access into over 180 countries.

**Future Products and Services:**

***Online Esports Tournament Play***

EEG intends to offer players from around the world, including the United States (unless prohibited in a state or international jurisdiction) the ability to enter and participate in online video game tournaments and win cash prizes, via our enhanced EGL tournament platform. Online esports tournament play consists of two or more people playing against each other in a game from their personal phones or computers, where such players do not necessarily have to be playing in real time. These events could be held over the course of a day, a week or even a month and the winner will be the one with the top score or the fastest time at the conclusion of the event. Cash-based tournaments involving games of skill are not considered gambling in most U.S. states because the generally accepted definition of gambling involves three specific things: (1) the award of a prize, (2) paid-in consideration (meaning entrants pay to compete) and (3) an outcome determined on the basis of chance. As a result, games of skill are not generally subject to the same laws and regulations as our esports event wagering service. We expect participants in our tournaments being able to enter and play against each other with prize money distributed to the last remaining competitors. We anticipate collecting a tournament entry fee for our tournaments, as well as a percentage of total winnings that are paid to users (typically 10% of the entry fees) and thus none of their money will be at risk or otherwise dependent on the outcome. We intend to offer users a wide selection of video games of skill to be played online for real money in groups, both large and small, or major tournaments. We believe using the tournament platform to penetrate the U.S. market will allow us to grow our brand within the esports community.

***International Market Expansion***

EEG received a gaming service license for online betting from the MGA in April 2020, and in February 2021, established a brick-and-mortar office and commenced online gaming operations in Malta. The Bethard brand acquisition added additional Swedish, Irish and Spanish licenses. In order to effectively penetrate international markets, we translated our website into several additional languages and offer customer service and technical support in the local language of key markets.

***EEG's Online Wagering Platforms***

According to Zion Market Research's, the online gambling market represents one of the fastest growing segments of the gambling industry. Zion Market Research estimated the size of the global online gambling market in 2021 was in excess of $61.5 billion and is projected to reach $114.4 billion by 2028.

iDefix, the Company's modern online casino platform that the Lucky Dino online casino brands operate on, is licensed in Malta. iDefix provides a full technical solution for casino operations, with various management tools as well as in-depth business intelligence reporting and analysis. The Bethard brands operate on SB Tech and offer online users traditional casino style games such as roulette, blackjack, or slots, as well as offering online wagering on traditional sporting events such as soccer, horse racing and football.

On the Vie.gg esports-focused wagering platform, a player can place a bet on a team participating in any number of approved tournaments, which are scheduled to be held in the upcoming weeks. The website also maintains a "how to play" section on the website which provides players with instructional videos on placing bets as well as other pieces of information that may be beneficial to an inexperienced player or a new user of our website. Additionally, the website includes a "frequently asked questions" section which provides customers with the ability to easily navigate general questions relating to the website, personal account information, payment processing and betting rules and procedures.

***Marketing and Sales Initiatives***

The Company has several sponsorship marketing agreements in place for its website.

EEG is looking to expand into new geographic territories by obtaining licenses to operate in those territories. The need for hands-on implementation in these territories and support will require investment in additional marketing activities, offices, and other overhead.

We will also accelerate our expansion if we find complementary businesses that we are able to acquire in other markets. Marketing efforts to expand into new territories have included esports team and tournament sponsorship, affiliate marketing, social media advertising, content creation, and attendance at esports and gaming events in addition to personal contact with other industry leaders.

We plan to increase our marketing efforts and awareness of our brands through our existing suite of websites, as well as future offerings by:

● Educating sports betting consumers and gamers to bet on esports;

● Sponsoring professional esports teams and tournaments that have a global reach;

● Working with sports and gaming celebrities and social media influencers who have an interest in video games and esports to generate new customers and increasing our efforts in attracting esports players and other celebrities who have an interest in video games and esports;

● Using a multichannel approach focused on acquiring and retaining customers; and

● Utilizing multiple social media platforms to promote our wagering business including, but not limited to, Facebook Twitter, Instagram, Snapchat, TikTok, Youtube, Twitch, Discord, WhatsApp, QQ, WeChat, email and SMS messages and using online advertisements, paid search optimization, and various social media campaigns to increase our online presence and drive traffic to our website.

Further, we intend to continue to invest in optimizing the Company's website in an effort to become the premier esports gaming and gambling website in the industry.

**Recent Developments**

***Leadership changes***

*Appointment of Michael Villani as Chief Financial Officer*

Effective January 6, 2023, the Company announced the appointment of Michael Villani as the Interim Chief Financial Officer ("CFO"), in addition to his current role as the Financial Controller. Mr. Villani will also serve as the Company's Principal Financial Officer.

*Resignation of Damian Mathews as Chief Operating Officer and Chief Financial Officer*

On December 31, 2022, Damian Mathews resigned from his position as Chief Operating Officer ("COO") and CFO of the Company. Mr. Mathews did not resign as a result of any disagreement with the Company on any matter relating to the Company's operations, policies or practices. Mr. Mathews will continue on in his role as a Director of the Company.

*Appointment of Alex Igelman as Chief Executive Officer*

On December 22, 2022, the Board of Directors (the "Board") of the Company appointed Alex Igelman as Chief Executive Officer ("CEO"), effective January 3, 2023.

*Termination of Grant Johnson as Chairman and Chief Executive Officer* 

On December 23, 2022, Grant Johnson resigned from the Board of the Company. Mr. Johnson resigned following his termination for cause, by the Board, from his position as Chairman and CEO of the Company, effective December 3, 2022. As a result, Mr. Johnson is no longer an officer or director of the Company.

See the section titled, "Management" and "Executive Compensation," for more information about Mr. Igelman and Mr. Villani.

***Registered Direct Offering***

On December 21, 2022, the Company entered into a securities purchase agreement with an institutional investor (the "SPA"). The SPA related to an offering of (a) 7,065,000 shares of our common stock, $0.001 par value per share, for a price of $0.0937 per share, directly to the investor and (b) pre-funded warrants to purchase 17,850,000 shares of our common stock at a price of $0.0937 per warrant, directly to such investor (the "Pre-funded Warrants"), with all but $0.001 per warrant prepaid to the Company at the closing of the offering. The exercise price of each Pre-funded Warrant is $0.001 per share of common stock. The closing of the offering was completed on December 21, 2022.

The Pre-funded Warrants may not be exercised to the extent they cause the purchaser of the Pre-funded Warrants to become a "beneficial owner" of more than 4.99% of our Common Stock for purposes of Section 13(d) of the Securities Exchange Act of 1934 (the "Beneficial Ownership Limitation"). The Beneficial Ownership Limitation may be increased at the discretion of the purchaser of the Pre-funded Warrants to any percentage less than or equal to 9.99% of our common stock upon 61 calendar days' notice or decreased at any time.

The net proceeds from the issuance and sale of the shares of common stock and Pre-funded Warrants, excluding the exercise of the Pre-funded Warrants, was approximately $2,146,686, after deducting the estimated offering expenses payable by us. At the closing of the offering, we remitted to the investor an amount equal to fifty percent (50%) of all the net proceeds from the sale of our common stock and Pre-funded Warrants, or approximately $1,073,343. The amounts remitted to the investor were applied to accrued interest and future interest payments through February 28, 2023 under the Senior Convertible Note. We will have broad discretion in the use of the remaining net proceeds upon satisfying our obligation to the holder of the Senior Convertible Note and payment of offering expenses, including for working capital and general corporate purposes to support ongoing business operations.

The shares of common stock and Pre-funded Warrants sold by us were registered pursuant to a registration statement on Form S-3 (File No. 333-252370), which the Securities and Exchange Commission (the "Commission") declared effective on February 5, 2021. A prospectus supplement and accompanying base prospectus relating to the offering were filed with the Commission on December 21, 2022.

The SPA contained customary representations and warranties and certain indemnification rights and obligations of the parties.

***Series B Preferred Stock***

On December 20, 2022, the Company entered into a Subscription and Investment Representation Agreement with a member of management of the Company, who is an accredited investor (the "Purchaser"), pursuant to which the Company agreed to issue and sell one hundred (100) shares of the Company's Series B Preferred Stock, par value $0.001 per share (the "Preferred Stock"), to the Purchaser for $10 per share in cash. The sale closed on December 21, 2022.

On December 21, 2022, the Company filed a certificate of designation (the "Certificate of Designation") with the Secretary of State of Nevada, effective as of the time of filing, designating the rights, preferences, privileges and restrictions of the shares of Preferred Stock. The Certificate of Designation provides that one hundred (100) shares of Preferred Stock will have 25,000,000 votes each and will vote together with the outstanding shares of the Company's common stock as a single class exclusively with respect to any proposal to effect a reverse stock split of the Company's common stock. The Preferred Stock will be voted, without action by the holder, on any such proposal in the same proportion as shares of common stock are voted. The Preferred Stock otherwise has no voting rights except as otherwise required by the Nevada Revised Statutes.

The Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the Company. The Preferred Stock has no rights with respect to any distribution of assets of the Company, including upon a liquidation, bankruptcy, reorganization, merger, acquisition, sale, dissolution or winding up of the Company, whether voluntarily or involuntarily. The holder of the Preferred Stock will not be entitled to receive dividends of any kind.

The outstanding shares of Preferred Stock shall be redeemed in whole, but not in part, at any time (i) if such redemption is ordered by the Board in its sole discretion or (ii) automatically upon the effectiveness of stockholder approval of the reverse stock split. Upon such redemption, the holder of the Preferred Stock will receive consideration of $1**0** per share in cash.

***Sale and Restructuring in the iGaming Business***

We have initiated a process to evaluate the strategic options for the iGaming business, including exploring a sale of iGaming assets due to increasing regulatory burdens and competition. Our new CEO will be tasked with assessing the value of the iGaming assets and determining next steps. The Company has also taken the following actions:

***Closure of Argyll and vie.gg***

On November 10, 2022, the Company determined that it would be closing down its licensed remote gambling operation in the UK market. The Company will surrender its UK license as part of the winding down of the Argyll UK iGaming operations. On November 15, 2022, as part of the winding down of the Argyll UK iGaming operations, players were informed that they would no longer be able to place bets from November 30, 2022 and that they could withdraw their balances through December 7, 2022. On December 8, 2022 Argyll UK surrendered its UK license and the surrender was confirmed by the UK Gambling Commission (the "UKGC") on December 9, 2022. Between December 7, 2022 and December 14, 2022 Argyll UK attempted to refund customer accounts that still had remaining balances. As of December 31, 2022, approximately $200,000 still remained to be refunded to customers. Going forward, Argyll UK will comply with requests for refunds to the extent required by law and in accordance with Argyll UK's terms and conditions. The Company had previously fully impaired the goodwill, intangible assets and other long-lived assets of the Argyll UK in the fiscal year ended June 30, 2022.

On October 28, 2022, the Company determined that it would close down its vie.gg New Jersey operations and exit its transactional waiver from the New Jersey Division of Gaming Enforcement.

***Sale of Spanish iGaming Operations***

On November 22, 2022, the Company signed a letter of intent to sell its Spanish iGaming operations, including its Spanish iGaming license. The Company expects to close the transaction in January 2023 and expects to receive approximately $1,000,000 in proceeds and 1,000,000 in cash from the return of a deposit held with the Spanish regulator. Sixty-five percent (65%) of the proceeds and cash received are required to be remitted to the Holder of the Senior Convertible Note. The estimated gain on sale is expected to be approximately $1,000,000. The sale of the Spanish license is subject to various closing conditions and we cannot assure that they will be satisfied. If the sale is not consummated, our liquidity position will be adversely impacted and this could further adversely impact our financial condition and results of operations.

***Senior Convertible Note***

On February 22, 2022, the Company exchanged the existing senior convertible note (the "Old Senior Convertible Note") with a remaining principal of $29,150,001, with the Senior Convertible Note in the aggregate principal of $35,000,000. As part of the Company's September 19, 2022 offering of shares of common stock and warrants to purchase common stock, the Company remitted to the holder of the Senior Convertible Note (the "Holder") an amount of $2,778,427 from the proceeds reducing the Senior Convertible Note principal balance to $32,221,573 as recorded in the unaudited condensed consolidated balance sheet as of September 30, 2022. As part of the December 2022 Registered Direct Offering the Company paid the Holder $1,073,343 for interest due and interest prepaid through February 28, 2023. The Company has not maintained compliance with certain debt covenants and is currently in default under the terms of the Senior Convertible Note. The Company is in discussions with the Holder to restructure its payment obligations, including but not limited to eliminating the derivative liability on its consolidated balance sheet and addressing the Company's default status under the debt. In connection with the Company's plan to maintain compliance with the Nasdaq Listing Rules, which includes actions to be taken to meet the minimum market value of listed securities or minimum stockholders' equity, the Company and the Holder of the Senior Convertible Note intend to exchange, pursuant to an available exemption under the Securities Act of 1933, as amended, no less than $7,000,000 of the Senior Convertible Note, and no less than $2,500,000 in accrued interest and other penalties incurred under the Senior Convertible Note, to new perpetual convertible preferred stock no later than February 20, 2023. The Company may issue up to a maximum of $34,700,000 of perpetual convertible preferred stock by June 30, 2023, which is equivalent to the principal balance due under the Senior Convertible Note of $32,221,573 and the balance of accrued interest and other penalties due to the Holder of approximately $2,500,000, in order to maintain long-term compliance with Nasdaq Listing Rules. Although the Company and the Holder of the Senior Convertible Note are in active discussions to determine the terms of the perpetual convertible preferred stock, as of the date of this prospectus, such terms have not been finalized and there is no assurance that the Company and the holder will come to an agreement on such terms. The ability of the Holder of the perpetual convertible preferred Stock to convert such preferred stock into shares of our common stock is subject to stockholder approval at our upcoming 2022 annual meeting of stockholders. The Company will disclose the material terms of the perpetual convertible preferred stock in connection with the completion of the exchange transaction, including the filing of a certificate of designation with the State of Nevada to designate the terms of such preferred stock. In addition, as part of our plan to maintain compliance with the Nasdaq Listing Rules, subject to stockholder approval at such annual meeting, we intend to effect a reverse stock split of our outstanding common stock, with our Board having the discretion as to the exact ratio of any reverse stock split, without a corresponding reduction in the total number of authorized shares of common stock.

***Compliance with Nasdaq Listing Requirements***

On April 11, 2022, the Company received a deficiency notification letter from the Listing Qualifications Staff of the Nasdaq Stock Market ("Nasdaq") indicating that the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2) because the bid price for the Company's Common Stock had closed below $1.00 per share for the previous thirty consecutive business days.

On June 7, 2022, the Company received a further letter from Nasdaq notifying the Company that for the last 30 consecutive business days, the Company's minimum Market Value of Listed Securities ("MVLS") was below the minimum of $35,000,000 required for continued listing on Nasdaq pursuant to Nasdaq Listing Rule 5550(b)(2).

On October 11, 2022, the Company received a third letter from Nasdaq notifying the Company that the Company's Common Stock will be delisted, and the Company's Common Stock warrants traded under the symbols GMBLW and GMBLZ and the Company's 10% Series A cumulative redeemable convertible preferred stock traded under symbol GMBLP will no longer qualify for listing, and in that regard trading of the Company's Common Stock, Common Stock warrants and 10% Series A cumulative redeemable convertible preferred stock will be suspended. The Company requested an appeal with the Nasdaq Hearings Panel (the "Panel") and the hearing was held on November 17, 2022.

On November 30, 2022, the Company received a determination from the Panel granting the Company's request for the continued listing of its common stock on the Capital Market tier of Nasdaq, subject to the Company evidencing compliance with Nasdaq's minimum bid price, and the $2,500,000 stockholders' equity requirement, as set forth in Nasdaq Listing Rules 5550(a)(2) and 5550(b)(1), respectively, on or before February 7, 2023 and March 31, 2023, respectively, and adhering to certain other conditions and requirements described below.

On December 6, 2022, the Company received a fourth letter from Nasdaq notifying the Company that it has not regained compliance with Listing Rule 5550(b)(2) requiring the Company to maintain a MVLS at a minimum of $35,000,000. This was addressed in the November 17, 2022, hearing before the Panel where the Company presented on its plan to comply with the Rule 5550(b)(2) or alternative criteria and was granted continued listing subject to the criteria noted above.

This offering is also being made to investors to satisfy the minimum equity requirement. The list of conditions provided by the Panel is as follows:

&nbsp;&nbsp;&nbsp;&nbsp;1. On
 or before January 13, 2023, the Company shall file a Form S-1 registration statement with the SEC for a $10 million public offering;

2. On
 January 26, 2023, the Company shall obtain stockholder approval for a reverse stock split at a ratio that is sufficient to
 ensure compliance with the Bid Price Rule;

3. On
 February 7, 2023, the Company shall have demonstrated compliance with the Bid Price Rule, by evidencing a closing bid price of $1
 or more per share for a minimum of ten consecutive trading sessions;

4. On
 February 20, 2023, the Company shall provide a written update to the Panel regarding the progress of its debt-to-equity conversion
 plan and its impact on the Company's equity; and

5. On
 March 31, 2023, the Company shall demonstrate compliance with the stockholder equity requirement, as outlined in Equity Rule.

Additionally, the Panel reserved the right to reconsider the terms of this exception. As a result, any failure to regain and maintain compliance with the continued listing requirements of Nasdaq could result in delisting of our common stock from Nasdaq and negatively impact our company and holders of our common stock, including by reducing the willingness of investors to hold our common stock because of the resulting decreased price, liquidity and trading of our common stock, limited availability of price quotations and reduced news and analyst coverage. Delisting may adversely impact the perception of our financial condition, cause reputational harm with investors, our employees and parties conducting business with us and limit our access to debt and equity financing.

As discussed above, the Company is in the process of taking definitive steps to comply with all applicable conditions and criteria for continued listing on Nasdaq. There can be no assurances, however, that the Company will be able to do so. The Company must satisfy the time frame granted by the Panel or Nasdaq will provide written notification that its securities will be delisted. As part of the compliance plan the Company is negotiating with the Holder of its Senior Convertible Note to restructure the Senior Convertible Note, including the derivative liability.

***Regulatory Developments***

We operate in both emerging and well-established competitive markets. We expect that our future growth will come from online gaming and sports betting via expansions of gaming in existing jurisdictions; entrance into new jurisdictions and, improvements and expansions of our existing properties and strategic acquisitions of gaming properties, expanded software sales to more screens in game centers including in universities, entertainment centers and casinos, as well as increased esports adoption and events, particularly in North America. We continue to adjust operations and cost structures to reflect the changing economic conditions. We also continue to focus on revenue and cost synergies from our acquisitions, and offering our customers additional gaming experiences through our affiliates. The gaming industry is characterized by an increasingly high degree of competition among a large number of participants, including game centers; riverboat casinos; dockside casinos; land-based casinos; video lottery; iGaming; online and retail sports betting; sports media companies; gaming at taverns; gaming at truck stop establishments; sweepstakes and poker machines not located in casinos; the potential for increased fantasy sports; significant growth of Native American gaming tribes, historic racing or state-sponsored i-lottery products in or adjacent to states we operate in; and other forms of gaming.

*United Kingdom*

Since the acquisition of the Argyll UK EEG iGaming business on July 31, 2020, the Company has responded to periodic requests for information from the UKGC in relation to information required to maintain its UK license following the change of corporate control. There have been no adverse judgments imposed by the UKGC against the Company. In recent months, the Company reduced its spending on marketing and was focused on retaining existing customers and reactivating past customers. On November 10, 2022, the Company determined that it would close down its licensed remote gambling operation in the UK market. On November 15, 2022, as part of the winding down of the Argyll UK iGaming operations, players were informed that they would no longer be able to place bets from November 30, 2022 and that they could withdraw their balances through December 7, 2022. On December 8, 2022 Argyll UK surrendered its UK license and the surrender was confirmed by the UKGC on December 9, 2022. Between December 7, 2022 and December 14, 2022 Argyll UK attempted to refund customer accounts that still had remaining balances. As of December 31, 2022, approximately $200,000 still remained to be refunded to customers. Going forward, Argyll UK will comply with requests for refunds to the extent required by law and in accordance with Argyll UK's terms and conditions.

*Netherlands*

A new licensing regime was implemented in the Netherlands for online gaming operators, with applications being accepted from April 1, 2021. EEG did not apply for a license after assessing the criteria for applying. The first licenses took effect on October 1, 2021. In a surprise to the market, the Dutch Minister for Legal Protection issued guidance warning that even those operators that were not targeting the Dutch market but were passively accepting Dutch customers would be punished, with authorities given the power to issue increased fines. Prior to this guidance, operators had understood that passive acceptance of bets was permissible. The vast majority of unlicensed operators (including EEG's brands) promptly withdrew from the Dutch market completely on October 1, 2021, closing all active Dutch customer accounts. The sudden and earlier than anticipated withdrawal from the Dutch market had a negative impact on the unlicensed operators in the region. The sole period in which the Company had revenues from its EEG iGaming operations in the Netherlands was in the fiscal quarter ended September 30, 2021.

*Finland*

On January 1, 2022, amendments to the Finnish Lotteries Act came into effect, further restricting marketing opportunities and enhancing the enforcement powers of the Finnish regulator. Prior to these amendments coming into effect, in the fiscal quarter ended December 31, 2021, the Company had received communications from the Finnish regulator requesting clarification on its marketing and gaming practices related to its Finnish EEG iGaming operations. The Company responded to the initial communication in the third quarter of fiscal year 2022 and received a second request for further clarification. On November 28, 2022, the Company provided its response, further addressing its business and marketing operations in Finland.

Further powers allowing the Finnish regulator to require blocking by payment service providers of overseas operators who are targeting their marketing activities towards Finnish customers are also due to come into effect in 2023. Operations in Finland run under the MGA license on the Lucky Dino in-house built iDefix casino-platform.

On January 5, 2023, the Company received a communication that the Finnish regulator was satisfied with the Company's response and no adverse judgments were imposed by the Finnish regulator against the Company.

**Corporate Information**

Our principal executive office address is Block 6, Triq Paceville, St. Julians, Malta, STJ 3109. Our telephone number is +356 2713-1276. Our website is www.esportsentertainmentgroup.com. The information contained in our website is not a part of this prospectus.

**Summary Risk Factors**

Investing in our securities involves a high degree of risk. These risks include, but are not limited to, the following:

● Because there is substantial doubt about our ability to continue as a going concern for a reasonable period of time, an investment in our common stock is highly speculative; holders of our common stock could suffer a total loss of their investment.

● If we fail to regain compliance with the continued listing requirements of Nasdaq, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.

● We have a history of accumulated deficits, recurring losses and negative cash flows from operating activities. We may be unable to achieve or sustain profitability or remain a going concern.

● If we do not comply with our obligations pursuant to our Senior Convertible Note, the noteholder could require us to redeem in cash any or all of the New Note which would have a material adverse effect on our business and financial condition.

● If we implement a reverse stock split, the liquidity of our common stock may be adversely affected.

● Competition within the global interactive entertainment and gaming industries is intense and our existing and potential users may be attracted to competing forms of entertainment such as television, movies and sporting events, as well as other entertainment and gaming options on the Internet. If our offerings do not continue to be popular, our business could be harmed.

● Since we have a limited operating history and limited history of revenue producing operations, it may be difficult for potential investors to evaluate our business.

● Our quarterly results can fluctuate and if we fail to meet the expectations of analysts or investors, our stock price and the value of your investment could decline substantially.

● We may require additional capital to support our growth plans, and such capital may not be available on terms acceptable to us, if at all. This could hamper our growth and adversely affect our business.

● We may invest in or acquire other businesses, and our business may suffer if we are unable to successfully integrate acquired businesses into our company or otherwise manage the growth associated with multiple acquisitions.

● We are vulnerable to additional or increased taxes and fees.

● Our growth prospects depend on the legal status of real-money gaming in various jurisdictions, including within the United States, and legalization may not occur in as many states or countries as we expect, or may occur at a slower pace than we anticipate. Additionally, even if jurisdictions legalize real money gaming, this may be accompanied by legislative or regulatory restrictions and/or taxes that make it impracticable or less attractive to operate in those jurisdictions, or the process of implementing regulations or securing the necessary licenses to operate in a particular jurisdiction may take longer than we anticipate, which could adversely affect our future results of operations and make it more difficult to meet our expectations for financial performance.

● Our business is subject to online security risk, including security breaches, denial of service or ransomware attacks, and loss or misuse of our stored information as a result of such a breach, including customers' personal information, could lead to government enforcement action or other litigation, potential liability, or otherwise harm our business.

● Risks related to our reliance on third party technology, platforms and software ("third-party software"), and any failures, errors, defects or disruptions in such third-party software could diminish our brand and reputation, subject us to liability, disrupt our business and adversely affect our operating results and growth prospects.

● The success, including win or hold rates, of existing or future online betting and casino gaming products depends on a variety of factors and is not completely controlled by us.

● Future cash flow fluctuations may affect our ability to fund our working capital requirements or achieve our business objectives in a timely manner.

● Failure to attract, retain and motivate key employees may adversely affect our ability to compete and the loss of the services of key personnel could have a material adverse effect on the business.

● Our internal control over financial reporting does not currently meet the standards required by Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), and failure to achieve and maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.

● Failure to remediate our material weaknesses or maintain adequate financial, information technology and management processes and controls could lead to errors in our financial reporting, which could adversely affect our business.

● Litigation costs and the outcome of litigation could have a material adverse effect on our business.

● While we work to integrate the iGaming businesses and operations together and leverage with the esports business and operations, management's focus and resources may be diverted from operational matters and other strategic opportunities.

● The risks related to international operations, in particular in countries outside of the United States and Canada, could negatively affect our results.

● We are subject to foreign exchange and currency risks that could adversely affect our operations, and our ability to mitigate our foreign exchange risk through hedging transactions may be limited.

● We are subject to various laws relating to trade, export controls, and foreign corrupt practices, the violation of which could adversely affect our operations, reputation, business, prospects, operating results and financial condition.

● The gaming industry is heavily regulated and failure by us to comply with applicable requirements could be disruptive to our business and could adversely affect our operations.

● We are subject to regulation affecting internet gaming which varies from one jurisdiction to another and future legislative and court proceedings pertaining to internet gaming may have a material impact on our operations and financial results.

● Regulations that may be adopted with respect to the internet and electronic commerce may decrease the growth in the use of the internet and lead to the decrease in the demand for our products and services.

● Legislative and regulatory changes could negatively affect our business and the business of our customers.

● Compromises of our systems or unauthorized access to confidential information or EEG's customers' personal information could materially harm our reputation and business.

● Systems, network or telecommunications failures or cyber-attacks may disrupt our business and have an adverse effect on our results of operations.

● Malfunctions of third-party communications infrastructure, hardware and software expose us to a variety of risks that we cannot control.

● The trading price of our common stock has been, and will likely continue to be, volatile and you could lose all or part of your investment.

● We may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.

● Efforts to remediate our material weaknesses and comply with the applicable provisions of Section 404 of the Sarbanes-Oxley Act will involve significant expenditures, and non-compliance with Section 404 of the Sarbanes-Oxley Act may adversely affect us and the market price of our Common Stock.

● We are a smaller reporting company and a non-accelerated filer and the reduced disclosure requirements available to us may make our Common Stock less attractive to investors.

● Public health epidemics or outbreaks, such as COVID-19, could materially and adversely impact our business.

The summary risk factors described above should be read together with the text of the full risk factors below and in the other information set forth in this prospectus, including our consolidated financial statements and the related notes, as well as in other documents that we file with the SEC. If any such risks and uncertainties occur, our business, prospects, financial condition and results of operations could be materially and adversely affected. The risks summarized above or described in full below are not the only risks that we face. Additional risks and uncertainties not currently known to us, or that we currently deem to be immaterial may also materially adversely affect our business, prospects, financial condition and results of operations.

In addition, our management has concluded that our historical recurring losses from operations and negative cash flows from operations as well as our dependence on securing other financings raise substantial doubt about our ability to continue as a going concern and our auditor has included an explanatory paragraph relating to our ability to continue as a going concern in its audit reports for the fiscal years ended June 30, 2022 and 2021.

**The Offering**

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| | |
|:---|:---|
| Issuer | Esports Entertainment Group, Inc. |
| Securities Being Offered; Offering Price | [●] shares of common stock, par value $0.001 per share at a price of [●] per share, including the underwriters' over-allotment option. |
| Exchange Listing and Trading | Our common stock trades on Nasdaq under the symbol "GMBL." On [●], 2023, the last reported sale price of our Common Stock was $[●] per share.<br>We currently have two classes of Common Stock Purchase Warrants that trade on Nasdaq under the symbols "GMBLW" and "GMBLZ."<br>Our Common Stock Purchase Warrants that have an exercise price of $4.25 per share and expire in April 2025 trade under the symbol GMBLW. On [●], 2023, the last reported sale price of our GMBLW warrants was $[●] per warrant.<br>Our Common Stock Purchase Warrants that have an exercise price of $1.00 per share and expire in March 2027 trade under the symbol GMBLZ. On [●], 2023, the last reported sale price of our GMBLZ warrants was $[●] per warrant. |
| Number of Shares of Common Stock Outstanding Before the Offering | [●] shares of common stock. |
| Number of Shares of Common Stock Outstanding<br> After the Offering | [●] shares of common stock (or [●] shares of common stock if the underwriters exercise their option to purchase additional shares of common stock from us in full). |
| Use of Proceeds | We estimate that the net proceeds from the issuance and sale of shares of Common Stock in this offering will be approximately $[●], after deducting the estimated offering expenses payable by us. We plan to remit to our Senior Secured Convertible Note Holder $[●] from these proceeds which will be applied to reduce the principal balance of our Senior Convertible Note. We intend to use the remaining net proceeds of this offering for working capital and general corporate purposes to support ongoing business operations. We will have broad discretion in the use of the remaining net proceeds upon satisfying our obligation to the holder of the Senior Convertible Note and payment of offering expenses. See "Use of Proceeds." |
| Over-allotment option | We have granted a 45-day option to the underwriters, exercisable one or more times in whole or in part, to purchase up to an additional [●] shares of Common Stock. |
| Risk Factors | In analyzing an investment in our common stock, you should carefully consider the information set forth under "Risk Factors" beginning on page S-11 of this prospectus, as well as the other information included in this prospectus. |

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**RISK FACTORS**

***Investing in our securities involves a high degree of risk. Before deciding whether to invest, you should read and carefully consider the following factors, as well as other information contained in this prospectus. The occurrence of any of the following risks could harm our business, financial condition or results of operations. In that case, the market price of our securities could decline, and you may lose all or part of your investment in our securities. In assessing the risks described below, you should also refer to the other information contained in this prospectus, including our financial statements and related notes, before making an investment decision. If any of these risks actually occurs, our business, financial condition, results of operations or cash flow could be seriously harmed. This could cause the trading price of our common stock to decline, resulting in a loss of all or part of your investment.***

**Risks Related to Owning our Common Stock**

***Because there is substantial doubt about our ability to continue as a going concern for a reasonable period of time, an investment in our common stock is highly speculative; holders of our common stock could suffer a total loss of their investment.***

Without additional financing, our cash will be depleted in the near term. In addition to the risk related to the Senior Convertible Note, we have an accumulated deficit of $153,309,017 as of September 30, 2022 and have a history of recurring losses from operations and recurring negative cash flows from operations. We also considered our current liquidity as well as future market and economic conditions that may be deemed outside of our control as it relates to obtaining financing and generating future profits. We believe that our current level of cash and cash equivalents are not sufficient to fund our operations and obligations without additional financing. Our ability to raise financing is subject to several factors, including market and economic conditions, performance, and investor sentiment as it relates to us and the esports and iGaming industry. The combination of these conditions was determined to raise substantial doubt regarding our ability to continue as a going concern. Furthermore, we may seek alternative sources of equity or debt financing, delay capital expenditures or evaluate potential asset sales, and potentially could seek relief under the applicable bankruptcy or insolvency laws. In the event of a bankruptcy proceeding or insolvency, or restructuring of our capital structure, holders of our common stock could suffer a total loss of their investment.

***If we fail to regain compliance with the continued listing requirements of Nasdaq, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.***

On April 11, 2022, we received a deficiency notification letter from the Listing Qualifications Staff of the Nasdaq Stock Market ("Nasdaq") indicating that we were not in compliance with Nasdaq Listing Rule 5550(a)(2) because the bid price for our Common Stock had closed below $1.00 per share for the previous 30 consecutive business days.

On June 7, 2022, the Company received a further letter from Nasdaq notifying the Company that for the last 30 consecutive business days, the Company's minimum Market Value of Listed Securities ("MVLS") was below the minimum of $35,000,000 required for continued listing on Nasdaq pursuant to Nasdaq Listing Rule 5550(b)(2).

On October 11, 2022, we received a third letter from Nasdaq notifying us that our Common Stock will be delisted, and our Common Stock warrants traded under the symbols GMBLW and GMBLZ and our 10% Series A cumulative redeemable convertible preferred stock traded under symbol GMBLP will no longer qualify for listing, and in that regard trading of our Common Stock, Common Stock warrants and 10% Series A cumulative redeemable convertible preferred stock will be suspended. We requested an appeal with the Nasdaq Hearings Panel (the "Panel") and the hearing was held on November 17, 2022.

On November 30, 2022, we received a determination from the Panel granting our request for the continued listing of our common stock on the Capital Market tier of Nasdaq, subject to our evidencing compliance with Nasdaq's minimum bid price, and the $2,500,000 shareholders' equity requirement, as set forth in Nasdaq Listing Rules 5550(a)(2) and 5550(b)(1), respectively, on or before February 7, 2023 and March 31, 2023, respectively, and adhering to certain other conditions and requirements.

On December 6, 2022, we received a fourth letter from Nasdaq notifying us that we had not regained compliance with Listing Rule 5550(b)(2) requiring us to maintain a MVLS at a minimum of $35,000,000. This was addressed in the November 17, 2022, hearing before the Panel where we presented on our plan to comply with the Rule 5550(b)(2) or alternative criteria and were granted continued listing subject to the criteria noted above.

As part of the compliance plan, we are negotiating with the Holder to restructure the Senior Convertible Note, including the derivative liability and we are asking our stockholders to approve in our upcoming fiscal 2022 annual meeting:

● a reverse stock split of the common stock at a ratio of not less than one-for-twenty (1-for-20) and not more than one-for-one-hundred (1-for-100), with our Board having the discretion as to the exact ratio of any reverse stock split to be set within the above range, without a corresponding reduction in the total number of authorized shares of common stock, and to be in effect no later than the earlier of the next annual meeting or the anniversary of this year's annual meeting; and

● the potential issuance of our outstanding common stock upon the conversion of a new perpetual convertible preferred stock to be issued in exchange for the Senior Convertible Note, as part of our approved plan of compliance with the Nasdaq Listing Rules.

While we are exercising diligent efforts to comply with the Panel's terms of compliance and maintain the listing of its Common Stock on Nasdaq, there can be no assurance that we will be able to regain or maintain compliance with Nasdaq listing standards, or that our securities will not be delisted.

Any failure to regain and maintain compliance with the continued listing requirements of Nasdaq could result in delisting of our common stock from Nasdaq and negatively impact our company and holders of our common stock, including by reducing the willingness of investors to hold our common stock because of the resulting decreased price, liquidity and trading of our common stock, limited availability of price quotations and reduced news and analyst coverage. Delisting may adversely impact the perception of our financial condition, cause reputational harm with investors, our employees and parties conducting business with us and limit our access to debt and equity financing.

***If our Common Stock is delisted from Nasdaq and is traded over-the-counter, your ability to trade and the market price of our shares of Common Stock may be restricted and negatively impacted.***

In addition to the foregoing, if our Common Stock is delisted from Nasdaq and is traded on the over-the-counter market, the application of the "penny stock" rules could adversely affect the market price of our Common Stock and increase the transaction costs to sell those shares. The SEC has adopted regulations which generally define a "penny stock" as any equity security not listed on a national securities exchange or quoted on Nasdaq that has a market price of less than $5.00 per share, subject to certain exceptions. If our Common Stock is delisted from Nasdaq and is traded on the over-the-counter market at a price of less than $5.00 per share, our Common Stock would be considered a penny stock. Unless otherwise exempted, the SEC's penny stock rules require a broker-dealer, before a transaction in a penny stock, to deliver a standardized risk disclosure document that provides information about penny stock and the risks in the penny stock market, the current bid and offer quotations for the penny stock, the compensation of the broker-dealer and the salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. Further, prior to a transaction in a penny stock, the penny stock rules require the broker-dealer to provide a written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's agreement to the transaction. If applicable in the future, the penny stock rules may restrict the ability of brokers-dealers to sell our Common Stock and may affect the ability of investors to sell their shares, until our Common Stock is no longer a penny stock.

***If we implement a reverse stock split, the liquidity of our Common Stock may be adversely effected.***

Subject to stockholder approval at our fiscal 2022 annual meeting, we intend to effect a reverse stock split of our outstanding Common Stock, with our Board having the discretion as to the exact ratio of any reverse stock split, without a corresponding reduction in the total number of authorized shares of Common Stock. If the reverse stock split proposal is not passed by our stockholders, we may nevertheless proceed to implement a reverse stock split of our Common Stock, with our board of directors having the discretion as to the exact ratio of any reverse stock split. Under Nevada law, our board of directors may take action to effect a reverse split of our Common Stock and a corresponding decrease to our authorized capital stock, without stockholder approval pursuant to Nevada Revised Statutes 78.207 if required to comply with the minimum bid price rule and if deemed to be in the interests of the Company. However, there can be no assurance that the market price per share of our Common Stock after the reverse stock split will remain unchanged or increase in proportion to the reduction in the number of shares of our common stock outstanding before the reverse stock split. The liquidity of the shares of our Common Stock may be affected adversely by any reverse stock split given the reduced number of shares of our Common Stock that will be outstanding following the reverse stock split, particularly if the market price of our Common Stock does not increase as a result of the reverse stock split. Following any reverse stock split, the resulting market price of our Common Stock may not attract new investors and may not satisfy the investing requirements of those investors. Although we believe that a higher market price of our Common Stock may help generate greater or broader investor interest, there can be no assurance that the reverse stock split will result in a share price that will attract new investors, including institutional investors. In addition, there can be no assurance that the market price of our Common Stock will satisfy the investing requirements of those investors. As a result, the trading liquidity of our Common Stock may not necessarily improve.

**Risks Related to the Senior Convertible Note**

***If we do not comply with our obligations pursuant to our Senior Convertible Note, the noteholder could require us to redeem in cash any or all of the Senior Convertible Note which would have a material adverse effect on our business and financial condition.***

On June 2, 2021, we issued the Old Senior Convertible Note before it was exchanged for the Senior Convertible Note on February 22, 2022. The Old Senior Convertible Note was issued to the Holder in the principal amount of $35,000,000 and we received proceeds at issuance of $32,515,000, net of debt issuance costs of $2,485,000. As part of our September 19, 2022 offering of shares of Common Stock and warrants to purchase Common Stock, we remitted to the Holder an amount of $2,778,427 from the proceeds reducing the Senior Convertible Note principal balance to $32,221,573 as of September 30, 2022. As part of the December 2022 Registered Direct Offering we remitted to the Holder $1,073,343 for interest due and interest prepaid through February 28, 2023.

The Senior Convertible Note agreement includes provision that should we be in both breach of its debt covenants and our price per common share trade below the Conversion Floor Price of $2.1832, the Holder may elect the Alternate Conversion option that includes a make-whole provision payable to the Holder in cash. At March 31, 2022 and through the date of this offering, we were both in breach of our debt covenants and the price per share of our Common Stock had declined below the Conversion Floor Price. As a result, the make-whole provision in the Senior Convertible Note agreement was determined to represent an obligation of ours under the terms of the Senior Convertible Note.

At September 30, 2022, we estimate we would be required to issue up to 14,758,874 shares of Common Stock under the Alternate Conversion make-whole provision of the Senior Convertible Note. At September 30, 2022, we also estimate the fair value of the derivative liability, which gives effect to the cash amount payable to the Holder under the Alternate Conversion make-whole provisions of the Senior Convertible Note, to be $9,124,756. While we record a derivative liability at each reporting period for the amount contingently payable to the Holder under the Alternate Conversion make-whole provision, a strict application of the formula in the Senior Convertible Note indicates the cash liability to the Holder may be materially higher than the derivative liability. A calculation of the cash liability due to the Holder under the Alternate Conversion make-whole provision of the Senior Convertible Note indicated a liability of approximately $606,000,000 at September 30, 2022.

The derivative liability amount recognized by us for our obligation to the Holder under the Alternate Conversion make-whole provision of the Senior Convertible Note is subject to material fluctuation at each reporting date. The output of the Monte Carlo model that is used to estimate the fair value of the derivative liability will fluctuate based on our share price, market capitalization, estimated enterprise value, and our estimate of credit and non-performance risk.

While we are currently in default with regards to the Senior Convertible Note, the Holder has not yet elected to require us to redeem in cash any or all of the Senior Convertible Note. In addition, the Holder has not elected to convert any or all of the Senior Convertible Note into shares of Common Stock.

If the Holder required us to redeem in cash any or all of the Senior Convertible Note, it would have a material adverse effect on our business and financial condition.

**Risks Related to this Offering**

***Management will have broad discretion as to the use of the proceeds from this offering, and we may not use the proceeds effectively.***

After deducting the underwriting discounts and commissions and estimated offering expenses payable by us, our management will have broad discretion in the application of the net proceeds from this offering. We plan to remit to the Holder of our Senior Secured Convertible Note, $[●] from the proceeds of this offering, which will be applied to reduce the principal balance of our Senior Convertible Note. We may utilize the net proceeds of this offering in ways that do not improve our results of operations or enhance the value of our common stock. Our failure to apply these funds effectively could have a material adverse effect on our business and cause the price of our common stock to decline.

***You will experience immediate and substantial dilution in the net tangible book value per share of the common stock you purchase.***

As of September 30, 2022, our net tangible book value (deficit) was approximately $(56,224,998), or approximately $(0.79) per share. Since the effective price per share of our Common Stock being offered in this offering is substantially higher than the net tangible book value per share of our Common Stock, you will suffer substantial dilution with respect to the net tangible book value of the Common Stock you purchase in this offering. Based on the assumed public offering price of $[●] per share of Common Stock being sold in this offering, and our net tangible book value per share as of September 30, 2022, if you purchase shares of Common Stock in this offering, you will suffer immediate and substantial dilution of $[●] per share with respect to the net tangible book value of the Common Stock (assuming no exercise of the underwriters' option to purchase additional shares). See the section entitled "Dilution" below for a more detailed discussion of the dilution you will incur if you purchase Common Stock in this offering.

***You may experience future dilution as a result of future equity offerings and other issuances of our common stock or other securities. In addition, this offering and future equity offerings and other issuances of our common stock or other securities may adversely affect the price of our Common Stock.***

In order to raise additional capital, we may in the future offer additional shares of our Common Stock or other securities convertible into or exchangeable for our Common Stock (such as warrants, convertible debt or preferred stock) at prices that may not be the same as the price per share in this offering. We may not be able to sell shares of Common Stock or other securities in any other offering at a price per share that is equal to or greater than the price per share paid by investors in this offering, and investors purchasing shares of Common Stock or other securities in the future could have rights superior to existing stockholders. The price per share at which we sell additional shares of our Common Stock or securities convertible into Common Stock in future transactions may be higher or lower than the price per share in this offering. In addition, the sale of shares of Common Stock in this offering and any future sales of a substantial number of shares of our Common Stock in the public market, or the perception that such sales may occur, could adversely affect the price of our Common Stock. We cannot predict the effect, if any, that market sales of those shares of Common Stock or the availability of those shares of Common Stock for sale will have on the market price of our Common Stock.

**Risks Related to Our Business**

***Competition within the global interactive entertainment and gaming industries is intense and our existing and potential users may be attracted to competing forms of entertainment such as television, movies and sporting events, as well as other entertainment and gaming options on the Internet. If our offerings do not continue to be popular, our business could be harmed.***

There is intense competition amongst gaming solution providers. There are a number of established, well financed companies producing both land-based and online gaming and interactive entertainment products and systems that compete with our products. As some of our competitors have financial resources that are greater than ours, they may spend more money and time on developing and testing products, undertake more extensive marketing campaigns, adopt more aggressive pricing policies or otherwise develop more commercially successful products than us, which could impact our ability to win new marketing contracts and renew our existing ones. Furthermore, new competitors may enter our key market areas. If we are unable to obtain significant market presence or if we lose market share to our competitors, our results of operations and future prospects would be materially adversely affected. There are many companies with already established relationships with third parties, including gaming operators that are able to introduce directly competitive products and have the potential and resources to quickly develop competitive technologies. Our success depends on our ability to develop new products and enhance existing products at prices and on terms that are attractive to our customers.

***There has also been consolidation among our competitors in the esports and gaming industry. Such consolidation could result in the formation of larger competitors with increased financial resources and altered cost structures, which may enable them to offer more competitive pricing models, gain a larger market share of customers, expand product offerings and broaden their geographic scope of operations.***

The industries in which we operate are characterized by intense competition. We compete against other providers of retail or online sports betting and online or brick-and-mortar casinos, as well as against providers of online and mobile entertainment and leisure products more generally. Other companies that provide these products and services are often well-established and financed, and other companies may introduce competitive products or services. Our competitors may spend more money and time on developing and testing products and services, undertake more extensive or far-reaching marketing campaigns, adopt more aggressive pricing, bonusing or promotions or otherwise develop more commercially successful products or services than ours, which could negatively impact our business. Our competitors may also develop products, features or services that are similar to ours or that achieve greater market acceptance. New competitors, whether licensed or not, may enter the sports betting or gaming industries. If we are unable to maintain or improve our market share, or if our offerings do not continue to be popular, our business, financial condition, results of operations and prospects could be adversely affected. Competitive pressures may also adversely affect our margins. We operate in the global gaming and entertainment industry with our online casino and online sports betting and other gaming offerings. Our customers face a vast array of entertainment choices. Other forms of entertainment, such as television, movies and digital streaming and on-demand services (which continue to gain popularity), social media, sporting events and in-person casinos, are more well-established, and our customers may view them as offering greater variety, affordability, interactivity and enjoyment. We compete with these and other forms of entertainment for our customers' discretionary time and income. If we are unable to sustain sufficient interest in our online and retail product and service offerings in comparison to other forms of entertainment, including new forms of entertainment, our business, financial condition, results of operations and prospects could be adversely affected. Our ability to grow our revenue in the future will depend, in large part, upon our ability to attract new customers to our offerings and retain and engage existing customers, as well as continued user adoption of online casino and online sports betting more generally. Growth in the online casino, sports betting and gaming industries and the level of demand for and market acceptance of our offerings will be subject to a high degree of uncertainty. We cannot provide assurance that customer adoption of our offerings will continue at their current levels or increase, as necessary, in the future, or that we will achieve growth consistent with the industry.

***Since we have a limited operating history and limited history of revenue producing operations, it is difficult for potential investors to evaluate our business.***

While we were incorporated under the laws of Nevada in July 2008, we did not begin to commence revenue generating operations until July 2020 with the acquisition of Argyll (which closed down its licensed remote gambling operation during December 2022 and is being wound down). Since that acquisition, we also acquired several businesses including FLIP, EGL, Lucky Dino, GGC, Helix (of which the game center assets were sold on June 10, 2022) and Bethard. Prior to these acquisitions, our operations focused primarily on the design, development and testing of our wagering systems. We continue to be subject to all the risks and uncertainties inherent in a new business and sale of new products and services. As a result, we still must establish many corporate functions necessary to operate our business, including finalizing our administrative structure, continuing our product development, assessing and expanding our marketing activities, implementing financial systems and controls and personnel recruitment. Accordingly, you should consider our prospects in light of the costs, uncertainties, delays, and difficulties frequently encountered by companies that are in a development stage. You should carefully consider the risks and uncertainties that a company, such as ours, with a limited operating history will face. In particular, you should consider that we cannot provide assurance that we will be able to:

● continue to operate as a going concern

● remain listed on Nasdaq;

● successfully implement or execute our current business plan;

● maintain our management team;

● raise sufficient funds in the capital markets to effectuate our business plan;

● attract, enter into or maintain contracts with, and retain customers; or

● compete effectively in the extremely competitive environment in which we operate.

If we cannot successfully accomplish the foregoing objectives, our business may not succeed.

***We have a history of accumulated deficits, recurring losses and negative cash flows from operating activities. We may be unable to achieve or sustain profitability or remain a going concern.***

We have only recently commenced revenue producing operations during the fiscal year ended June 30, 2021 through the previously mentioned acquisitions. If we are unable to increase revenues in future periods, we will not be able to achieve and maintain profitability. Beyond this, we may incur significant losses in the future for a number of reasons including other risks described in this document, and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown events. Accordingly, we may not ever be able to achieve profitability. We incurred negative cash flows from operating activities and recurring net losses in fiscal years 2022 and 2021. As of June 30, 2022, and 2021, our accumulated deficit was $149,140,426 and $46,908,336, respectively, and as of September 30, 2022 our accumulated deficit was $153,309,017. These factors, among others, raised substantial doubt about our ability to continue as a going concern.

***Our quarterly results can fluctuate and if we fail to meet the expectations of analysts or investors, our stock price and the value of your investment could decline substantially.***

Our betting operations are subject to the seasonal variations dictated by the sporting calendar, which may have an effect on its financial performance. Customer engagement in our online casino and sports betting offerings may vary due to numerous factors, including customers satisfaction with our platform, the number and timing of sporting events, the length of professional sports seasons, our offerings and those of our competitors, our marketing efforts, climate and weather conditions, public sentiment or an economic downturn. As customer engagement varies, so may our quarterly financial performance. Traditional sports have an off-season that can cause a corresponding, temporary decrease in their respective revenues. Our ability to generate revenues is also affected by the scheduling of major events that do not occur annually.

Cancellation or curtailment of significant sporting events, for example due to adverse weather, traffic or transport disruption or civil disturbances or the outbreak of infectious diseases, or the failure of certain sporting teams to qualify for sporting events, may adversely impact our business, financial condition and results of operations for the relevant period.

***We may require additional capital to support our growth plans, and such capital may not be available on terms acceptable to us, if at all. This could hamper our growth and adversely affect our business.***

We intend to make investments to support our business growth and may require additional funds to respond to business challenges, including the need to develop new offerings and features or enhance our existing offerings and features, improve our operating infrastructure or acquire complementary businesses, personnel and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. Our ability to obtain additional capital, if and when required, will depend on our business plans, investor demand, our operating performance, capital markets conditions and other factors. If we raise additional funds by issuing equity, equity-linked or debt securities, those securities may have rights, preferences or privileges senior to the rights of our currently issued and outstanding equity or debt, and our existing stockholders may experience dilution. If we are unable to obtain additional capital when required, or on satisfactory terms, our ability to continue to support our business growth or to respond to business opportunities, challenges or unforeseen circumstances could be adversely affected, and our business may be harmed.

***We may invest in or acquire other businesses, and our business may suffer if we are unable to successfully integrate acquired businesses into our company or otherwise manage the growth associated with multiple acquisitions.***

As part of our business strategy, we have made, and we intend to continue to make, acquisitions as opportunities arise to add new or complementary businesses, products, brands or technologies. In some cases, the costs of such acquisitions may be substantial, including as a result of professional fees and due diligence efforts. There is no assurance that the time and resources expended on pursuing a particular acquisition will result in a completed transaction, or that any completed transaction will ultimately be successful. In addition, we may be unable to identify suitable acquisition or strategic investment opportunities, or may be unable to obtain any required financing or regulatory approvals, and therefore may be unable to complete such acquisitions or strategic investments on favorable terms, if at all. We may decide to pursue acquisitions with which our investors may not agree and we cannot assure investors that any acquisition or investment will be successful or otherwise provide a favorable return on investment. In addition, acquisitions and the integration thereof require significant time and resources and place significant demands on our management, as well as on our operational and financial infrastructure. In addition, if we fail to successfully close transactions or integrate new teams, or integrate the products and technologies associated with these acquisitions into our company, our business could be seriously harmed. Acquisitions may expose us to operational challenges and risks, including:

● the ability to profitably manage acquired businesses or successfully integrate the acquired businesses' operations, personnel, financial reporting, accounting and internal controls, technologies and products into our business;

● increased indebtedness and the expense of integrating acquired businesses, including significant administrative, operational, economic, geographic or cultural challenges in managing and integrating the expanded or combined operations;

● entry into jurisdictions or acquisition of products or technologies with which we have limited or no prior experience, and the potential of increased competition with new or existing competitors as a result of such acquisitions;

● diversion of management's attention and the over-extension of our operating infrastructure and our management systems, information technology systems, and internal controls and procedures, which may be inadequate to support growth;

● the ability to fund our capital needs and any cash flow shortages that may occur if anticipated revenue is not realized or is delayed, whether by general economic or market conditions, or unforeseen internal difficulties; and

● the ability to retain or hire qualified personnel required for expanded operations.

Our acquisition strategy may not succeed if we are unable to remain attractive to target companies or expeditiously close transactions. Issuing shares of Common Stock to fund an acquisition would cause economic dilution to existing stockholders. If we develop a reputation for being a difficult acquirer or having an unfavorable work environment, or target companies view our Common Stock unfavorably, we may be unable to consummate key acquisition transactions essential to our corporate strategy and our business may be seriously harmed.

***The failure to consummate the sale of the Spanish license could adversely affect our liquidity position, financial condition and results of operations.***

The sale of the Spanish license is subject to various closing conditions and we cannot assure that they will be satisfied. If the sale is not consummated, our liquidity position will be adversely impacted and this could further adversely impact our financial condition and results of operations.

***Risks that impact our affiliate marketing program may negatively impact us.***

Because we generate website traffic through our affiliate marketing program, if participants in our affiliate marketing program see a slowdown in business or website traffic it may lead to fewer visitors on our website, which could have an adverse effect on our business.

***Because a number of our directors and a substantial portion of our assets are located in jurisdictions other than the United States and Canada, you may have no effective recourse against the directors not located in the United States and Canada for misconduct and may not be able to enforce a judgment and/or civil liabilities against these directors.***

Three of our directors and a substantial portion of our assets are or may be located in jurisdictions outside the U.S. As a result, a person may not be able to affect service of process within the U.S. on our directors and officers. A person also may not be able to recover against them on judgments of U.S. courts or to obtain original judgments against them in foreign courts, including judgments predicated upon civil liability provisions of the U.S. federal securities laws.

***Our business is particularly vulnerable to additional or increased taxes and fees.***

We believe that the prospect of raising significant additional revenue through taxes and fees is one of the primary reasons that certain jurisdictions permit legalized gaming. As a result, gaming companies are typically subject to significant taxes and fees in addition to the normal federal, state, provincial and local income taxes and such taxes and fees may be increased at any time. From time to time, legislators and officials have proposed changes in tax laws or in the administration of laws affecting the gaming industry. Many states and municipalities, including ones in which we operate, are currently experiencing budgetary pressures that may make it more likely they would seek to impose additional taxes and fees on our operations. It is not possible to determine the likelihood or extent of any such future changes in tax laws or fees, or changes in the administration of such laws; however, if enacted, such changes could have a material adverse impact on our business.

***Our growth prospects depend on the legal status of real-money gaming in various jurisdictions, including within the United States, and legalization may not occur in as many states or countries as we expect, or may occur at a slower pace than we anticipate. Additionally, even if jurisdictions legalize real money gaming, this may be accompanied by legislative or regulatory restrictions and/or taxes that make it impracticable or less attractive to operate in those jurisdictions, or the process of implementing regulations or securing the necessary licenses to operate in a particular jurisdiction may take longer than we anticipate, which could adversely affect our future results of operations and make it more difficult to meet our expectations for financial performance.***

A number of U.S. states have legalized, or are currently considering legalizing, real money gaming. Our business, financial condition, results of operations and prospects are significantly dependent upon continued and increasing legalization of real money gaming. If a large number of additional states or the federal government enact real money gaming legislation and we are unable to obtain, or are otherwise delayed in obtaining the necessary licenses to operate online sports betting or iGaming websites in U.S. jurisdictions where such games are legalized, our future growth in online sports betting and iGaming could be materially impaired.

As we enter into new jurisdictions, states or the federal government may legalize real money gaming in a manner that is unfavorable to us. As a result, we may encounter legal, regulatory and political challenges that are difficult or impossible to foresee and which could result in an unforeseen adverse impact on planned revenues or costs associated with the new opportunity. For example, certain states require us to have a relationship with a retail operator for online sportsbook access, which tends to increase our costs of revenue. States that have established state-run monopolies may limit opportunities for participants like us. States also impose substantial tax rates on online sports betting and iGaming revenue, in addition to the federal excise tax of 25 basis points on the amount of each wager. As most state product taxes apply to various measures of modified gross profit, tax rates, whether federal- or state-based, that are higher than we expect will make it more costly and less desirable for us to launch in a given jurisdiction, while tax increases in any of our existing jurisdictions may adversely impact our profitability.

Therefore, even in cases in which a jurisdiction purports to license and regulate sports betting or iGaming, the licensing and regulatory regimes can vary considerably in terms of their business-friendliness and at times may be intended to provide incumbent operators with advantages over new licensees. Therefore, some "liberalized" regulatory regimes are considerably more commercially attractive than others.

Furthermore, in the online real money gaming industry, a significant "first mover" advantage exists. Our ability to compete effectively in respect of a particular style of online real money gaming in the United States may be premised on introducing a style of gaming before our competitors. Failing to do so could materially impair our ability to grow in the online real money gaming space. We may fail to accurately predict when online real money gaming will be legalized in significant jurisdictions. The legislative process in each state and at the Federal level is unique and capable of rapid, often unpredictable change. If we fail to accurately forecast when and how, if at all, online real money gaming will be legalized in additional state jurisdictions, such failure could impair our readiness to introduce online real money gaming offerings in such jurisdictions which could have a material adverse impact on our business.

***Our business is subject to online security risk, including security breaches, denial of service or ransomware attacks, and loss or misuse of our stored information as a result of such a breach, including customers' personal information, could lead to government enforcement action or other litigation, potential liability, or otherwise harm our business.***

We receive, process, store and use personal information and other customer data. There are numerous federal, state and local laws regarding privacy and the storing, sharing, use, processing, disclosure and protection of personal information and other data. Any failure or perceived failure by us to comply with our privacy policies, our privacy-related obligations to customers or other third parties, or our privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other player data, may result in governmental enforcement actions, litigation or public statements against us by consumer advocacy groups or others and could cause our customers to lose trust in us which could have an adverse impact on our business. In the area of information security and data protection, many states have passed laws requiring notification to customers when there is a security breach for personal data, such as the 2002 amendment to California's Information Practices Act, or requiring the adoption of minimum information security standards that are often vaguely defined and difficult to practically implement. The costs of compliance with these types of laws may increase in the future as a result of changes in interpretation or changes in law. Any failure on our part to comply with these types of laws may subject us to significant liabilities.

Third parties we work with, such as vendors, may violate applicable laws or our policies, and such violations may also put our customers' information at risk and could in turn have an adverse impact on our business. We are also subject to payment card association rules and obligations under each association's contracts with payment card processors. Under these rules and obligations, if information is compromised, we could be liable to payment card issuers for the associated expense and penalties. If we fail to follow payment card industry security standards, even if no customer information is compromised, we could incur significant fines or experience a significant increase in payment card transaction costs.

Security breaches, computer malware and computer hacking attacks have become more prevalent in our industry. Many companies, including ours, have been the targets of such attacks. Any security breach caused by hacking which involves efforts to gain unauthorized access to information or systems, or to cause intentional malfunctions or loss or corruption of data, software, hardware or other computer equipment, and the inadvertent transmission of computer viruses could harm our business. Though it is difficult to determine what harm may directly result from any specific interruption or breach, any failure to maintain performance, reliability, security and availability of our network infrastructure to the satisfaction of our players may harm our reputation and our ability to retain existing players and attract new players.

If we experience unauthorized disclosure of the source code we currently license we could potentially lose future trade secret protection for that source code. This could make it easier for third parties to compete with our products by copying functionality which could adversely affect our revenue and operating margins. Unauthorized disclosure of source code also could increase security risks.

Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems, change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. We have developed systems and processes that are designed to protect customer information and prevent data loss and other security breaches, including systems and processes designed to reduce the impact of a security breach at a third-party vendor; however, such measures cannot provide absolute security.

***Risks related to our reliance on third party technology, platforms and software ("third-party software"), and any failures, errors, defects or disruptions in such third-party software could diminish our brand and reputation, subject us to liability, disrupt our business and adversely affect our operating results and growth prospects.***

We rely on third party software that is critical to the performance of our platform and offerings and to user satisfaction. Bethard Brands utilize SB Tech and Together Gaming and Lucky Dino has various third-party casino game suppliers.

If there is any interruption to the third-party software provided by these suppliers or their products or services are not as scalable as anticipated or at all, or if there are problems in upgrading such products or services, our business could be adversely affected, and we may be unable to find adequate replacement services on a timely basis or at all and/or at a reasonable price. Additionally, third-party software may contain errors, bugs, flaws or corrupted data, and these defects may only become apparent after their launch. If a particular product offering is unavailable when end users attempt to access it or navigation through our platforms is slower than they expect, users may be unable to place their bets and may be less likely to return to our platforms as often, if at all. Furthermore, programming errors, defects and data corruption could disrupt our operations, adversely affect the experience of our users, harm our reputation, cause our users to stop utilizing our platforms, divert our resources and delay market acceptance of our offerings, any of which could result in legal liability to us or harm our business, financial condition, results of operations and prospects. Moreover, end users are discriminating about the nature of the products offered and if our suppliers do not provide new and improved products on a regular basis, we may lose market share.

There is a risk that if contracts with such third parties are terminated or not renewed, or not renewed on favorable terms, or if they do not get the level of support (in terms of updates and technical assistance) they require as we grow, our financial condition and performance going forward may be materially impacted. There may be circumstances in which we wish to terminate our arrangements with such suppliers due to poor performance or other reasons, but we are unable to do so. Any such circumstance may have a material adverse effect on our reputation, business, financial condition and results of operations.

We are dependent upon such software suppliers defending any challenges to their intellectual property. Any litigation that arises as a result of such change could materially impact us and, even if legal actions were successfully defended, such actions could disrupt our business in the interim, divert management's time and result in significant cost and expense for us. Further, any negative publicity related to any of our third-party partners, including any publicity related to regulatory concerns, could adversely affect our reputation and brand, and could potentially lead to increased regulatory or litigation exposure.

As a condition of an ongoing license, permit or other authorization required for their business, a key supplier may determine that a condition of the ongoing use its products and services, or the continuation of the license, is that we should block customers from certain territories, which may cause business disruption and loss should we either need to switch suppliers on short notice or discontinue business in certain territories, either permanently (while such suppliers are necessary) or pending the expiry of contract notice periods and/or the sourcing of alternative suppliers.

***We rely on third-party providers to validate the identity and identify the location of our users, and if such providers fail to perform adequately, provide accurate information or we do not maintain business relationships with them, our business, financial condition and results of operations could be adversely affected.***

There is no guarantee that the third-party geolocation and identity verification systems that we rely on will perform adequately or will function as designed and within the requirements of our business and the law. We rely on our geolocation and identity verification systems to ensure we are in compliance with certain laws and regulations, and any service disruption to those systems would prohibit us from operating our offerings and would adversely affect our business. Additionally, incorrect or misleading geolocation and identity verification data with respect to current or potential users received from third-party service providers may result in us inadvertently allowing access to our offerings to individuals who should not be permitted to access them, or otherwise inadvertently deny access to individuals who should be able to access our offerings, in each case based on inaccurate identity or geographic location determination. Our third-party geolocation service provider relies on its ability to obtain information necessary to determine geolocation from mobile devices, operating systems, and other sources. Changes, disruptions or temporary or permanent failure to access such sources by our third-party services providers may result in their inability to accurately determine the location of our users. Moreover, our inability to maintain our existing contracts with third-party services providers, or to replace them with equivalent third parties, may result in our inability to access geolocation and identity verification data necessary for our day-to-day operations. If any of these risks materialize, we may be subject to disciplinary action, fines and lawsuits, and our business, financial condition and results of operations could be adversely affected.

***We rely on third-party payment processors to process deposits and withdrawals made by our users, and if we cannot manage our relationships with such third parties and other payment-related risks, our business, financial condition and results of operations could be adversely affected.***

We rely on a limited number of third-party payment processors to process deposits and withdrawals made by our users. If any of our third-party payment processors terminates its relationship with us or refuses to renew its agreement with us on commercially reasonable terms, we would need to find an alternate payment processor, and may not be able to secure similar terms or replace such payment processor in an acceptable time frame. Further, the software and services provided by our third-party payment processors may not meet our expectations, contain errors or vulnerabilities, be compromised or experience outages. Any of these risks could cause us to lose our ability to accept online payments or other payment transactions or make timely payments to our users, any of which could make our technology less trustworthy and convenient and adversely affect our ability to attract and retain our users.

Nearly all of our payments are made by credit card, debit card or through other third-party payment services, which subjects us to certain regulations and to the risk of fraud. Any introduction of legislation or regulations restricting financial transactions with online gambling operators or prohibiting the use of credit cards and other banking instruments for online gambling transactions, or any other increase in the stringency of regulation of financial transactions, whether in general or in relation to the online gambling industry in particular, may restrict our ability to accept payment from our customers or facilitate withdrawals by them. Certain governments may seek to impede the online gambling industry by introducing legislation or through enforcement measures designed to prevent customers or financial institutions based in their jurisdictions from transferring money to online gambling operations. They may seek to impose embargoes on currency use, wherever transactions are taking place. This may result in the providers of payment systems for a particular market deciding to cease providing their services for such market. This in turn would lead to an increased risk of payments due to us being misappropriated, frozen or diverted by banks and credit card companies. We may in the future offer new payment options to users that may be subject to additional regulations and risks. There may be a limited availability of alternative systems, in particular in light of recent consolidation in the financial services industry. We are also subject to a number of other laws and regulations relating to the payments we accept from our users, including with respect to money laundering, money transfers, privacy and information security. If we fail to comply with applicable rules and regulations, we may be subject to civil or criminal penalties, fines and/or higher transaction fees and may lose our ability to accept online payments or other payment card transactions, which could make our offerings less convenient and attractive to our users. If any of these events were to occur, our business, financial condition and results of operations could be adversely affected.

For example, if we are deemed to be a money transmitter as defined by applicable regulation, we could be subject to certain laws, rules and regulations enforced by multiple authorities and governing bodies in the United States and numerous state and local agencies who may define money transmitter differently. For example, certain states may have a more expansive view of who qualifies as a money transmitter. Additionally, outside of the United States, we could be subject to additional laws, rules and regulations related to the provision of payments and financial services, and if we expand into new jurisdictions, the foreign regulations and regulators governing our business that we are subject to will expand as well. If we are found to be a money transmitter under any applicable regulation and we are not in compliance with such regulations, we may be subject to fines or other penalties in one or more jurisdictions levied by federal or state or local regulators, including state Attorneys General, as well as those levied by foreign regulators. In addition to fines, penalties for failing to comply with applicable rules and regulations could include criminal and civil proceedings, forfeiture of significant assets or other enforcement actions. We could also be required to make changes to our business practices or compliance programs as a result of regulatory scrutiny.

***If we fail to detect fraud or theft, including by our users and employees, our reputation may suffer which could harm our brand and reputation and negatively impact our business, financial condition and results of operations and can subject us to investigations and litigation.***

We have in the past incurred, and may in the future incur, losses from various types of financial fraud, including use of stolen or fraudulent credit card data, claims of unauthorized payments by a user and attempted payments by users with insufficient funds. Bad actors use increasingly sophisticated methods to engage in illegal activities involving personal information, such as unauthorized use of another person's identity, account information or payment information and unauthorized acquisition or use of credit or debit card details, bank account information and mobile phone numbers and accounts. Under current credit card practices, we may be liable for use of funds on our products with fraudulent credit card data, even if the associated financial institution approved the credit card transaction.

Acts of fraud may involve various tactics, including collusion. Successful exploitation of our systems could have negative effects on our product offerings, services and user experience and could harm our reputation. Failure to discover such acts or schemes in a timely manner could result in harm to our operations. In addition, negative publicity related to such schemes could have an adverse effect on our reputation, potentially causing a material adverse effect on our business, financial condition, results of operations and prospects. In the event of the occurrence of any such issues with our existing technology or product offerings, substantial engineering and marketing resources and management attention may be diverted from other projects to correct these issues, which may delay other projects and the achievement of our strategic objectives.

In addition, any misappropriation of, or access to, users' or other proprietary information or other breach of our information security could result in legal claims or legal proceedings, including regulatory investigations and actions, or liability for failure to comply with privacy and information security laws, including for failure to protect personal information or for misusing personal information, which could disrupt our operations, force us to modify our business practices, damage our reputation and expose us to claims from our users, regulators, employees and other persons, any of which could have an adverse effect on our business, financial condition, results of operations and prospects.

Despite measures we have taken to detect and reduce the occurrence of fraudulent or other malicious activity on our offerings, we cannot guarantee that any of our measures will be effective or will scale efficiently with our business. Our failure to adequately detect or prevent fraudulent transactions could harm our reputation or brand, result in litigation or regulatory action and lead to expenses that could adversely affect our business, financial condition and results of operations.

***We are required to comply with applicable anti-money laundering and countering the financing of terrorism legislation a breach of which could lead to government enforcement action or other litigation, potential liability, or otherwise harm our business.***

We receive deposits and other payments from customers in the normal course of their business. The receipt of monies from customers imposes anti-money laundering and other obligations and potential liabilities on us. Compliance with all such laws and regulations creates complex regulatory obligations which involves a risk of large financial penalties (in not being fully compliant) and additional potential burdens (in being fully compliant). While we have processes in place regarding customer profiling and the identification of customers' source of funds, such processes may fail or prove to be inadequate whether in respect of the source of customers' funds or otherwise. Any such failure or inadequacy could have a material adverse effect on our financial position and impact upon our licensing obligations.

Handling, or any form of facilitating the use of criminal property, is a crime in all jurisdictions in which we take material custom (and going forward will take material custom). In instances where no local licensing regime is in place and there is doubt in connection with the legality of the remote supply of gambling services, there is a risk that the authorities will claim that money movements in connection with gambling amounts to money laundering, irrespective of whether the intention is actually to launder money (i.e., to disguise or conceal its provenance). This gives rise to a risk that when monies are held in (or moved into) certain territories, authorities may wish to freeze their onward payment, seek to trace money movements into different jurisdictions and recover the relevant sums. This would give rise to conflicts of law issues (not all the definitions of what comprises criminal property are identical in all jurisdictions) and what may not amount to money laundering in one jurisdiction may satisfy the definition in that other territory. There is a risk that should any such claim be brought and be successful, significant funds may have to be repatriated to the jurisdiction bringing a claim, which would have a significant impact on our profitability.

***We rely on other third-party data and live-streaming providers for real-time and accurate data and/or live streams for sporting events, and if such third parties do not perform adequately or terminate their relationships with us, our costs may increase and our business, financial condition and results of operations could be adversely affected.***

We rely on third-party sports data and live streaming providers to obtain accurate information regarding schedules, results, performance and outcomes of sporting events and the live streaming of such events, such as horse racing. We rely on this data to determine when and how bets are settled. We have experienced, and may continue to experience, errors in this data and/or streaming feed which may result in us incorrectly settling bets. If we cannot adequately resolve the issue with our end users, our end users may have a negative experience with our offerings, our brand or reputation may be negatively affected and our users may be less inclined to continue or resume utilizing our products or recommend our platform to other potential users. As such, a failure or significant interruption in our service would harm our reputation, business and operating results.

Furthermore, if any of our data and/or live streaming partners terminates its relationship with us or refuses to renew its agreement with us on commercially reasonable terms, we would need to find an alternate provider, and may not be able to secure similar terms or replace such providers in an acceptable time frame. Any of these risks could increase our costs and adversely affect our business, financial condition and results of operations. Further, any negative publicity related to any of our third-party partners, including any publicity related to regulatory concerns, could adversely affect our reputation and brand, and could potentially lead to increased regulatory or litigation exposure.

***We may be subject to the payment of contributions or fees to sporting bodies or rights holders for the use of their data.***

Gambling operators can be liable to make contributions to sporting bodies whether under regulations or agreement, such as The Horserace Betting Levy Board in the UK, as a way of ensuring certain revenues generated from betting on sports are used to benefit those sports or related interests. We may also be required to pay royalties or other types of levies to the organizers of sporting events, or the rights holders in respect of such, to offer betting markets on such events. Any requirement to pay additional levies, fees or royalties could have a material adverse effect on our business. In all such cases, the level of any such levy, fee or royalty will be outside of our control and would have a negative effect on our business and financial results. We cannot predict with any certainty what future payments may be required for the success of their business and what other additional resources will need to be made available to address the conditions which impose fees, royalties or other levies, as well as sports integrity issues.

***The success, including win or hold rates, of existing or future online betting and casino gaming products depends on a variety of factors and is not completely controlled by us.***

The sports betting and casino gaming industries are characterized by an element of chance. Accordingly, our brands employ theoretical win rates to estimate what a certain type of sports bet or game, on average, will win or lose in the long run. Net win is impacted by variations in the hold percentage (the ratio of net win to total amount wagered), or actual outcome, on our games and sports betting we offer to our users. We use the hold percentage as an indicator of a casino game's or sports bet's performance against its expected outcome. Although each game or sports bet generally performs within a defined statistical range of outcomes, actual outcomes may vary for any given period. In addition to the element of chance, win rates (hold percentages) may also (depending on the game involved) be affected by the spread of limits and factors that are beyond our control, such as an end user's skill, experience and behavior, the mix of games played, the financial resources of users, the volume of bets placed and the amount of time spent gambling. As a result of the variability in these factors, the actual win rates on our online casino games and sports bets may differ from the theoretical win rates we have estimated and could result in the winnings of our casino game's or sports bet's users exceeding those anticipated. The variability of win rates (hold rates) also have the potential to negatively impact our financial condition, results of operations, and cash flows.

***Participation in the sports betting industry exposes us to trading, liability management and pricing risk. We may experience lower than expected profitability and potentially significant losses as a result of a failure to determine accurately the odds in relation to any particular event and/or any failure of its sports risk management processes.***

Our fixed-odds betting products involve betting where winnings are paid on the basis of the stake placed and the odds quoted. Odds are determined with the objective of providing an average return to the Company over a large number of events and therefore, over the long term, gross win percentage is expected to remain fairly constant. However, there can be significant variation in gross win percentage event-by-event and day-by-day. As a result, in the short term, there is less certainty of generating a positive gross win, and we may experience significant losses with respect to individual events or betting outcomes, in particular if large individual bets are placed on an event or betting outcome or series of events or betting outcomes. Odds compilers and risk managers are capable of human error, thus even allowing for the fact that a number of betting products are subject to capped pay-outs, significant volatility can occur. In addition, it is possible that there may be such a high volume of trading during any particular period that even automated systems would be unable to address and eradicate all risks. Any significant losses on a gross-win basis could have a material adverse effect on our business, financial condition and results of operations. In addition, if a jurisdiction where we hold or wish to apply for a license imposes a high turnover tax for betting (as opposed to a gross-win tax), this too would impact profitability, particularly with high value/low margin bets, and likewise have a material adverse effect on our business.

***Our profitability depends upon many factors for which no assurance can be given.***

Profitability depends upon many factors, including the ability to develop and maintain valuable products and services, our ability to identify and obtain the rights to additional products to add to our existing product line, success and expansion of our sales programs, expansion of our customer base, obtaining the right balance of expense levels and the overall success of our business activities. We may not be able to achieve or sustain profitability on a quarterly or annual basis. Our failure to become and remain profitable would depress the value of our company and our stock, and could impair our ability to raise capital, expand our business, diversify our product offerings or even continue our operations. A decline in the value of our stock could also cause you to lose all or part of your investment.

***Future cash flow fluctuations may affect our ability to fund our working capital requirements or achieve our business objectives in a timely manner.***

Our working capital requirements and cash flows are expected to be subject to quarterly and yearly fluctuations, depending on such factors as timing and size of capital expenditures, levels of sales and collection of receivables, customer payment terms and supplier terms and conditions. We expect that a greater than expected slow-down in capital spending by our customers may require us to adjust our current business model. As a result, our revenues and cash flows may be materially lower than we expect, and we may be required to reduce our capital expenditures and investments or take other measures in order to meet our cash requirements. We may seek additional funds from liquidity-generating transactions and other conventional sources of external financing (which may include a variety of debt, convertible debt and/or equity financings). We cannot provide any assurance that our net cash requirements will be as we currently expect. Our inability to manage cash flow fluctuations resulting from the above factors could have a material adverse effect on our ability to fund our working capital requirements from operating cash flows and other sources of liquidity or to achieve our business objectives in a timely manner.

***Our business may be materially and adversely affected by increased levels of debt.***

In order to finance our business or to finance possible acquisitions we may incur significant levels of debt compared to historical levels, and we may need to secure additional sources of funding, which may include debt or convertible debt financing, in the future. A high level of debt, arduous or restrictive terms and conditions relating to accessing certain sources of funding, failure to meet the financial and/or other covenants in our credit and/or support facilities and any significant reduction in, or access to, such facilities, poor business performance or lower than expected cash inflows could have adverse consequences on our ability to fund our business operations. Other effects of a high level of debt include the following:

● we may have difficulty borrowing money in the future or accessing sources of funding;

● we may need to use a large portion of our cash flows from operating activities to pay principal and interest on our indebtedness, which would reduce the amount of cash available to finance our operations and other business activities;

● a high debt level, arduous or restrictive terms and conditions, or lower than expected cash flows would make us more vulnerable to economic downturns and adverse developments in our business; putting us at risk of violating debt covenants; and

● if operating cash flows are not sufficient to meet our operating expenses, capital expenditures and debt service requirements as they become due, we may be required, in order to meet our debt service obligations, to delay or reduce capital expenditures or the introduction of new products and services, sell assets and/or forego business opportunities including acquisitions, research and development projects or product design enhancements.

***Our online offerings are part of new and evolving industries, which presents significant uncertainty and business risks.***

The online gaming and interactive entertainment industry, which includes social, casual and mobile gaming and interactive entertainment, is relatively new and continues to evolve. Whether these industries grow and whether our online business will ultimately succeed, will be affected by, among other things, developments in social networks, mobile platforms, legal and regulatory developments (such as the passage of new laws or regulations or the extension of existing laws or regulations to online gaming activities), taxation of gaming activities, data privacy laws and regulation and other factors that we are unable to predict and which are beyond our control. Given the dynamic evolution of these industries, it can be difficult to plan strategically, and it is possible that competitors will be more successful than we are at adapting to change and pursuing business opportunities. Additionally, as the online gaming industry advances, including with respect to regulation, we may become subject to additional compliance-related costs. Consequently, we cannot provide assurance that its online and interactive offerings will grow at the rates expected or be successful in the long term.

Several companies have launched online social casino offerings, and new competitors are likely to continue to emerge, some of which may be operated by social gaming companies with a larger base of existing users, or by casino operators with more experience in operating a casino. If our products do not obtain popularity or maintain popularity or fail to grow in a manner that meets management's expectations, our results of operations and financial condition could be harmed.

***We operate in a very competitive business environment and if we do not adapt our approach and our products to meet this competitive environment, our business, results of operations or financial condition could be adversely impacted.***

There is intense competition in the gaming management and gaming products industry which is characterized by dynamic customer demand and rapid technological advances. Today, there are many systems providers in the U.S. and abroad offering casinos and gaming operators "total solution" casino management and table games management systems. As a result, we must continually adapt our approach and our products to meet this demand and match technological advances and if we cannot do so, our business results of operations or financial condition may be adversely impacted. Conversely, the development of new competitive products or the enhancement of existing competitive products in any market in which we operate could have an adverse impact on our business, results of operations or financial condition. If we are unable to remain dynamic in the face of changes in the market, it could have a material adverse effect on our business, results of operations or financial condition.

***Our growth will depend on our ability to attract and retain users, and the loss of our users, failure to attract new users in a cost-effective manner, or failure to effectively manage our growth could adversely affect our business, financial condition, results of operations and prospects.***

Our ability to achieve growth in revenue in the future will depend, in large part, upon our ability to attract new users to our offerings, retain existing users of our offerings and reactivate users in a cost-effective manner. Achieving growth in our community of users may require us to increasingly engage in sophisticated and costly sales and marketing efforts, which may not make sense in terms of return on investment. We have used and expect to continue to use a variety of free and paid marketing channels, in combination with compelling offers and exciting games to achieve our objectives. For paid marketing, we intend to leverage a broad array of advertising channels, including sponsorships, affiliate networks, social media platforms, such as Facebook, Instagram, Twitter and Twitch, paid and organic search, and other digital channels, such as mobile display. If the search engines on which we rely modify their algorithms, change their terms around gaming, or if the prices at which we may purchase listings increase, then our costs could increase, and fewer users may click through to our website. If links to our website are not displayed prominently in online search results, if fewer users click through to our website, if our other digital marketing campaigns are not effective, or if the costs of attracting users using any of our current methods significantly increase, then our ability to efficiently attract new users could be reduced, our revenue could decline and our business, financial condition and results of operations could be harmed.

In addition, our ability to increase the number of users of our offerings will depend on continued user adoption of esports. Growth in the esports industry and the level of demand for and market acceptance of our product offerings will be subject to a high degree of uncertainty. We cannot assure that consumer adoption of our product offerings will continue or exceed current growth rates, or that the industry will achieve more widespread acceptance.

Additionally, as technological or regulatory standards change and we modify our platforms to comply with those standards, we may need users to take certain actions to continue playing, such as performing age verification checks or accepting new terms and conditions. Users may stop using our product offerings at any time, including if the quality of the user experience on our platform, including our support capabilities in the event of a problem, does not meet their expectations or keep pace with the quality of the customer experience generally offered by competitive offerings.

***Failure to attract, retain and motivate key employees may adversely affect our ability to compete and the loss of the services of key personnel could have a material adverse effect on the business.***

We depend on the services of a few key executive officers. We recently hired a new CEO and promoted a new CFO, due to departures of our previous CEO and CFO (who also held the position of COO), and the loss of any key persons could have a material adverse effect on our business, results of operations and financial condition. Our success is also highly dependent on our continuing ability to identify, hire, train, motivate and retain highly qualified technical, marketing and management personnel. Competition for such personnel can be intense, and we cannot provide assurance that we will be able to attract or retain highly qualified technical, marketing and management personnel in the future. Stock options may comprise a significant component of key employee compensation, and if the market price of our Common Stock price declines, it may be difficult to retain such individuals. Similarly, changes in our share price may hinder our ability to recruit key employees, as they may elect to seek employment with other companies that they believe have better long-term prospects. Our inability to attract and retain the necessary technical, marketing and management personnel may adversely affect our future growth and profitability. Our retention and recruiting may require significant increases in compensation expenses, which would adversely affect our results of operation.

***Our internal control over financial reporting does not currently meet the standards required by Section 404 of the Sarbanes-Oxley Act, and failure to achieve and maintain effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business and stock price.***

We are a "smaller reporting company" as defined in Item 10(f)(1) of Regulation S-K. Although we are not required to provide an attestation report on the internal controls over financial reporting by our independent registered public accounting firm, we are required to comply with applicable requirements of the Sarbanes-Oxley Act as well as other rules and regulations that include, but are not limited to, the listing standards of Nasdaq, including changes in corporate governance practices and the establishment and maintenance of effective disclosure and financial controls. The rules governing the standards that must be met for our management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. We might encounter problems or delays in completing the implementation of any changes necessary to make a favorable assessment of our internal control over financial reporting as it relates to our operations inclusive of recent business combinations. If we cannot favorably assess the effectiveness of our internal control over financial reporting, investors could lose confidence in our financial information and the price of our Common Stock could decline.

***Failure to remediate our material weaknesses or maintain adequate financial, information technology and management processes and controls could lead to errors in our financial reporting and decision making, which could adversely affect our business.***

We have identified material weaknesses in our internal control that includes the inability to: (i) complete an effective assessment of our internal controls over financial reporting, (ii) maintain sufficient period-end financial reporting controls related to segregation of duties, reviews of completed or non-recurring transactions, and procedures for preparing the financial statements and disclosures and (iii) maintain sufficient information technology controls and perform testing of information technology controls for operating effectiveness. If we do not remediate our material weaknesses and complete our implementation of internal controls, we may not detect errors timely, produce reliable financial reports, and prevent financial fraud. A lack of internal control could also result in regulatory scrutiny and a loss of confidence by stakeholders, which in turn could harm our business and adversely affect the market price of our Common Stock. Failure to comply with Section 404 of the Sarbanes-Oxley Act could also potentially subject us to sanctions or investigations by the SEC, FINRA or other regulatory authorities, as well as increase the risk of liability arising from litigation based on securities law. If we are unable to upgrade our systems, implement additional financial and management controls, reporting systems, IT systems and procedures, and hire additional accounting, finance, compliance and audit staff in a timely and effective fashion, our ability to comply with our financial reporting requirements and other rules that apply to reporting companies under the Exchange Act and the Sarbanes-Oxley Act could be impaired.

***Our business is vulnerable to changing economic conditions and to other factors that adversely affect the industries in which we operate.***

The demand for entertainment and leisure activities tends to be highly sensitive to changes in consumers' disposable income, and thus can be affected by changes in the economy and consumer tastes, both of which are difficult to predict and beyond our control. Unfavorable changes in general economic conditions, including recessions, economic slowdown, sustained high levels of unemployment, and increasing fuel or transportation costs, may reduce customers' disposable income or result in fewer individuals visiting casinos, whether land-based or online, or otherwise engaging in entertainment and leisure activities, including gambling. As a result, we cannot ensure that demand for our products or services will remain constant. Continued or renewed adverse developments affecting economies throughout the world, including a general tightening of availability of credit, decreased liquidity in many financial markets, increasing interest rates, increasing energy costs, acts of war or terrorism, transportation disruptions, natural disasters, declining consumer confidence, sustained high levels of unemployment or significant declines in stock markets, could lead to a further reduction in discretionary spending on leisure activities, such as gambling. Any significant or prolonged decrease in consumer spending on entertainment or leisure activities could reduce our online games, reducing our cash flows and revenues. If we experience a significant unexpected decrease in demand for our products, we could incur losses.

***Changes in ownership of competitors or consolidations within the gaming industry may negatively impact pricing and lead to downward pricing pressures which could reduce revenue.***

A decline in demand for our products in the gaming industry could adversely affect our business. Demand for our products is driven primarily by the replacement of existing services as well as the expansion of existing online gaming, and the expansion of new channels of distribution, such as mobile gaming. Additionally, consolidation within the online gambling market could result in us facing competition from larger combined entities, which may benefit from greater resources and economies of scale. Also, any fragmentation within the industry creating a number of smaller, independent operators with fewer resources could also adversely affect our business as these operators might cause a further slowdown in the replacement cycle for our products.

***Litigation costs and the outcome of litigation could have a material adverse effect on our business.***

From time to time, we may be subject to litigation claims through the ordinary course of our business operations regarding, among other things, employment matters, security of consumer and employee personal information, contractual relations with suppliers, marketing and infringement of trademarks and other intellectual property rights. Litigation to defend us against claims by third parties, or to enforce any rights that we may have against third parties, may be necessary, which could result in substantial costs and diversion of our resources, causing a material adverse effect on our business, financial condition and results of operations. Aside from the lawsuit and other matters referenced herein under the heading "Legal Proceedings", we are not aware of any current material legal proceedings outstanding, threatened or pending as of the date hereof by or against us. However, given the nature of our business, we are, and may from time to time in the future be, party to various, and at times numerous, legal, administrative and regulatory inquiries, investigations, proceedings and claims that arise in the ordinary course of business. Because the outcome of litigation is inherently uncertain, if one or more of such legal matters were to be resolved against us for amounts in excess of management's expectations, our results of operations and financial condition could be materially adversely affected.

***While we work to integrate the iGaming businesses and operations together and leverage with the esports business and operations, management's focus and resources may be diverted from operational matters and other strategic opportunities.***

Successful integration of acquisitions operations, sports betting, gaming and esports technology and personnel places an additional burden on management and other internal resources. The diversion of management's attention and any difficulties encountered in the transition and integration process could harm our business, financial condition, results of operations and prospects. In addition, uncertainty about the effect of the acquisitions on our systems, employees, customers, partners, and other third parties, including regulators, may have an adverse effect on us. These uncertainties may impair our ability to attract, retain and motivate key personnel for some time after the acquisitions.

Furthermore, the overall integration of the businesses may result in material unanticipated problems, expenses, liabilities, competitive responses, and loss of customers and other relationships. The difficulties of combining the operations of the companies include, among others, difficulties in integrating operations and systems; conforming standards, controls, procedures and accounting and other policies, business cultures and compensation structures; assimilating employees, including possible culture conflicts and different opinions on technical decisions and product roadmaps; managing the expanded operations of a larger and more complex company, including coordinating a geographically dispersed organization; and keeping existing customers and obtaining new customers. Many of these factors will be outside our control and any one of them could result in increased costs, decreases in the amount of expected revenues and diversion of management's time and energy, which could materially impact our business, financial condition and results of operations.

***Our business may be materially and adversely affected by the combined company's business following acquisitions. If we are required to write down goodwill and other intangible assets, our financial condition and results would be negatively affected.***

When we acquire a business, a substantial portion of the purchase price of the acquisition is allocated to goodwill and other identifiable intangible assets. The amount of the purchase price which is allocated to goodwill and other intangible assets is determined by the excess of the purchase price over the net identifiable assets acquired. According to the Board issued Accounting Standards Update No. 2014-02*, Intangibles—Goodwill and Other (Topic 350): Accounting for Goodwill*, and Accounting Standards Update No. 2014-18, *Business Combinations (Topic 805): Accounting for Identifiable Intangible Assets in a Business Combination*, which addresses the financial accounting and reporting standards for the acquisition of intangible assets outside of a business combination and for goodwill and other intangible assets subsequent to their acquisition. This accounting standard requires that goodwill and intangible assets deemed to have indefinite lives no longer be amortized but instead be tested for impairment at three different points in time. We must also perform annual tests for impairment. However, upon meeting certain criteria, we may not require a quantitative annual test. We may also be required to perform an interim impairment test, which is required if certain "triggering events" occur, such as adverse changes in the business climate or market which might negatively impact the value of a reporting unit. Finally, other intangible assets will continue to be amortized over their useful lives. Under current accounting standards, if we determine goodwill or intangible assets are impaired, we will be required to write down these assets. Any write-down would have a negative effect on the consolidated financial statements.

**Risks Related to International Operations**

***The risks related to international operations, in particular in countries outside of the United States and Canada, could negatively affect our results.***

A material portion of our operations are conducted in foreign jurisdictions including, but not limited to the United Kingdom, Malta and Sweden. It is expected that we will derive a significant majority of our revenue from transactions denominated in currencies other than the United States dollar, and we expect that receivables with respect to foreign sales will continue to account for a significant majority of our total accounts and receivables outstanding. As such, our operations may be adversely affected by changes in applicable foreign government policies and legislation or social instability and other factors which are not within our control, including, but not limited to, recessions in foreign economies, expropriation, nationalization and limitation or restriction on repatriation of funds, assets or earnings, longer receivables collection periods and greater difficulty in collecting accounts receivable, changes in consumer tastes and trends, renegotiation or nullification of existing contracts or licenses, changes in gaming policies, regulatory requirements or the personnel administering them, currency fluctuations and devaluations, exchange controls, economic sanctions and royalty and tax increases, risk of terrorist activities, revolution, border disputes, implementation of tariffs and other trade barriers and protectionist practices, taxation policies, including royalty and tax increases and retroactive tax claims, volatility of financial markets and fluctuations in foreign exchange rates, difficulties in the protection of intellectual property particularly in countries with fewer intellectual property protections, the effects that evolving regulations regarding data privacy may have on our online operations, adverse changes in the creditworthiness of parties with whom we have significant receivables or forward currency exchange contracts, labor disputes and other risks arising out of foreign governmental sovereignty over the areas in which our operations are conducted. Our operations may also be adversely affected by social, political and economic instability and by laws and policies of such foreign jurisdictions affecting foreign trade, taxation and investment. If our operations are disrupted and/or the economic integrity of our contracts is threatened for unexpected reasons beyond our control, our business may be harmed.

Our international activities may require protracted negotiations with host governments, national companies and third parties. Foreign government regulations may favor or require the awarding of contracts to local contractors or require foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. In the event of a dispute arising in connection with our operations in a foreign jurisdiction where we conduct our business, we may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdictions of the courts of United States or Canada or enforcing American and Canadian judgments in such other jurisdictions. We may also be hindered or prevented from enforcing our rights with respect to a governmental instrumentality because of the doctrine of sovereign immunity. Accordingly, our activities in foreign jurisdictions could be substantially affected by factors beyond our control, any of which could have a material adverse effect on us. We believe that management's experience to date in commercializing our products and solutions in Europe and the Caribbean may be of assistance in helping to reduce these risks. Some countries in which we may operate may be considered politically and economically unstable.

Doing business in the industries in which we operate often requires compliance with numerous and extensive procedures and formalities. These procedures and formalities may result in unexpected or lengthy delays in commencing important business activities. In some cases, failure to follow such formalities or obtain relevant evidence may call into question the validity of the entity or the actions taken. Our management is unable to predict the effect of additional corporate and regulatory formalities which may be adopted in the future including whether any such laws or regulations would materially increase our cost of doing business or affect its operations in any area.

We may in the future enter into agreements and conduct activities outside of the jurisdictions where we currently carry on business, which may present challenges and risks that we have not faced in the past, any of which could adversely affect the results of operations and/or financial condition.

***We are subject to foreign exchange and currency risks that could adversely affect our operations, and our ability to mitigate our foreign exchange risk through hedging transactions may be limited.***

We expect that we will derive a significant majority of our revenues in currencies other than the United States dollar; however, a substantial portion of our operating expenses are incurred in United States dollars. Fluctuations in the exchange rate between the U.S. dollar, the Euro and other currencies may have a material adverse effect on our business, financial condition and operating results. Our consolidated financial results are affected by foreign currency exchange rate fluctuations. Foreign currency exchange rate exposures arise from current transactions and anticipated transactions denominated in currencies other than United States dollars and from the translation of foreign-currency-denominated balance sheet accounts into United States dollar-denominated balance sheet accounts. We are exposed to currency exchange rate fluctuations because portions of its revenue and expenses are denominated in currencies other than the United States dollar, particularly the Euro. In particular, uncertainty regarding economic conditions in Europe and the debt crisis affecting certain countries in the European Union pose risk to the stability of the Euro. Exchange rate fluctuations could adversely affect our operating results and cash flows and the value of its assets outside of United States. If a foreign currency is devalued in a jurisdiction in which we are paid in such currency, then our customers may be required to pay higher amounts for our products, which they may be unable or unwilling to pay.

While we may enter into forward currency swaps and other derivative instruments intended to mitigate the foreign currency exchange risk, there can be no assurance we will do so or that any instruments that we enter into will successfully mitigate such risk. If we enter into foreign currency forward or other hedging contracts, we would be subject to the risk that a counterparty to one or more of these contracts defaults on its performance under the contracts. During an economic downturn, a counterparty's financial condition may deteriorate rapidly and with little notice, and we may be unable to take action to protect its exposure. In the event of a counterparty default, we could lose the benefit of its hedging contract, which may harm its business and financial condition. In the event that one or more of our counterparties becomes insolvent or files for bankruptcy, our ability to eventually recover any benefit lost as a result of that counterparty's default may be limited by the liquidity of the counterparty. We expect that we will not be able to hedge all of our exposure to any particular foreign currency, and we may not hedge our exposure at all with respect to certain foreign currencies. Changes in exchange rates and our limited ability or inability to successfully hedge exchange rate risk could have an adverse impact on our liquidity and results of operations.

***Global privacy concerns could result in regulatory changes and impose additional costs and liabilities on us, limit our use of information, and adversely affect our business.***

Personal privacy has become a significant issue in Canada, the United States, Europe, and many other countries in which we currently operate and may operate in the future. Many federal, state, and foreign legislatures and government agencies have imposed or are considering imposing restrictions and requirements about the collection, use, and disclosure of personal information obtained from individuals. Changes to laws or regulations affecting privacy could impose additional costs and liability on us and could limit its use of such information to add value for customers. If we were required to change our business activities or revise or eliminate services, or to implement burdensome compliance measures, our business and results of operations could be harmed. In addition, we may be subject to fines, penalties, and potential litigation if we fail to comply with applicable privacy regulations, any of which could adversely affect our business, liquidity and results of operation.

***Our results of operations could be affected by natural events in the locations in which we operate or where our customers or suppliers operate.***

We, our customers, and our suppliers have operations in locations subject to natural occurrences such as severe weather and other geological events, including hurricanes, earthquakes, or flood that could disrupt operations. Any serious disruption at any of our facilities or the locations of our customers or suppliers due to a natural disaster could have a material adverse effect on revenues and increase our costs and expenses. If there is a natural disaster or other serious disruption at any of our facilities, it could impair our ability to adequately supply our customers, cause a significant disruption to our operations, cause us to incur significant costs to relocate or re-establish these functions and negatively impact our operating results. While we intend to seek insurance against certain business interruption risks, such insurance may not adequately compensate us for any losses incurred as a result of natural or other disasters. In addition, any natural disaster that results in a prolonged disruption to the operations of our customers or suppliers may adversely affect its business, results of operations or financial condition.

**Risks Related to Regulation**

***The gaming industry is heavily regulated and failure by us to comply with applicable requirements could be disruptive to our business and could adversely affect our operations.***

The gaming industry is subject to extensive scrutiny and regulation at all levels of government, both domestic and foreign, including but not limited to, federal, state, provincial, local, and in some instances, tribal authorities. While the regulatory requirements vary by jurisdiction, most require:

● licenses and/or permits;

● findings of suitability;

● documentation of qualifications, including evidence of financial stability; and

● other required approvals for companies who operate in online gaming or manufacture or distribute gaming equipment and services, including but not limited to approvals for new products.

Compliance with the various regulations applicable to internet gaming is costly and time-consuming. Regulatory authorities at the non-U.S., U.S. federal, state and local levels have broad powers with respect to the regulation and licensing of internet gaming operations and our licenses may be revoked, suspended or limited for non-compliance and regulators have the power to impose substantial fines on us and take other actions, any one of which could have a material adverse effect on our business, financial condition, results of operations and prospects. These laws and regulations are dynamic and subject to potentially differing interpretations, and various legislative and regulatory bodies may expand current laws or regulations or enact new laws and regulations regarding these matters. We will strive to comply with all applicable laws and regulations relating to our business. It is possible, however, that these requirements may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules. Non-compliance with any such law or regulations could expose us to claims, proceedings, litigation and investigations by private parties and regulatory authorities, as well as substantial fines and negative publicity, each of which may materially and adversely affect our business.

Any license, permit, approval or finding of suitability may be revoked, suspended or conditioned at any time. The loss of a license in one jurisdiction could trigger the loss of a license or affect our eligibility for a license in another jurisdiction. We may be unable to obtain or maintain all necessary registrations, licenses, permits or approvals, and could incur fines or experience delays related to the licensing process which could adversely affect its operations. The finding of suitability process may be expensive and time-consuming. Our delay or failure to obtain licenses and approvals in any jurisdiction may prevent us from distributing our solutions and generating revenues. A gaming regulatory body may refuse to issue or renew a registration, license or other approval if we, or one of our directors, officers, employees or associates: (i) is considered to be a detriment to the integrity or lawful conduct or management of gaming, (ii) no longer meets a registration, license or other approval requirement, (iii) has breached or is in breach of a condition of registration, licensure, other approval or an operational agreement with a regulatory authority, (iv) has made a material misrepresentation, omission or misstatement in an application for registration, license or other approval or in reply to an enquiry by a person conducting an audit, investigation or inspection for a gaming regulatory authority, (v) has been refused a similar registration, license or other approval in another jurisdiction, (vi) has held a similar registration, or license or other approval in that province, state or another jurisdiction which has been suspended, revoked or cancelled, or (vii) has been convicted of an offense, inside or outside of the United States that calls into question our honesty or integrity or the honesty or integrity of one of our directors, officers, employees or associates.

Generally, any person who fails or refuses to apply for a finding of suitability or a license within the prescribed period after being advised that it is required by gaming authorities may be denied a license or found unsuitable, as applicable. Furthermore, we may be subject to disciplinary action or our licenses may be in peril if, after we receive notice that a person is unsuitable to be a stockholder or to have any other relationship with us or any of our subsidiaries, we: (i) pay that person any dividend or interest upon our voting securities; (ii) allow that person to exercise, directly or indirectly, any voting right conferred through securities held by that person; (iii) pay remuneration in any form to that person for services rendered or otherwise; or (iv) fail to pursue all lawful efforts to require such unsuitable person to relinquish his voting securities.

Additionally, our services must be approved in some jurisdictions in which they are offered, which approval cannot be assured or guaranteed. Obtaining these approvals is a time-consuming process that can be extremely costly. Even where a jurisdiction regulates online gaming, it may not be commercially desirable to secure a license in such a jurisdiction due to tax or other operational considerations.

A provider of gaming solutions may pursue corporate regulatory approval with regulators of a particular jurisdiction while it pursues technical regulatory approval for its gaming solutions by that same jurisdiction. It is possible that after incurring significant expenses and dedicating substantial time and effort towards such regulatory approvals, we may not obtain either of them. If we fail to obtain the necessary certification, registration, license, approval or finding of suitability in a given jurisdiction, we would likely be prohibited from distributing our services in that particular jurisdiction altogether. If we fail to seek, does not receive, or receive a revocation of a license in a particular jurisdiction for our games, hardware or software, then we cannot sell, service or place on a participation or leased basis or license our products in that jurisdiction and our issued licenses in other jurisdictions may be impacted. Furthermore, some jurisdictions require license holders to obtain government approval before engaging in some transactions, such as business combinations, reorganizations, stock offerings and repurchases. We may not be able to obtain all necessary registrations, licenses, permits, approvals or findings of suitability in a timely manner, or at all. Delays in regulatory approvals or failure to obtain such approvals may also serve as a barrier to entry to the market for our solutions. If we are unable to overcome the barriers to entry, it will materially affect our results of operations and future prospects. To the extent new gaming jurisdictions are established or expanded, we cannot guarantee we will be successful in penetrating such new jurisdictions or expanding our business in line with the growth of existing jurisdictions. As we enter into new markets, we may encounter legal and regulatory challenges that are difficult or impossible to foresee and which could result in an unforeseen adverse impact on planned revenues or costs associated with the new market opportunity. If we are unable to effectively develop and operate within these new markets, then our business, operating results and financial condition could be impaired. Our failure to obtain the necessary regulatory approvals in jurisdictions, whether individually or collectively, would have a material adverse effect on our business.

To expand into new jurisdictions, we may need to be licensed, obtain approvals of our products and/or seek licensure of our officers, directors, major stockholders, key employees or business partners. Any delays in obtaining or difficulty in maintaining regulatory approvals needed for expansion within existing markets or into new jurisdictions can negatively affect our opportunities for growth or delay our ability to recognize revenue from the sale or installation of products in any such jurisdictions.

Directly related to the above risk, we have responded to periodic requests for information from the UKGC in relation to information required to maintain its UK license following the change of corporate control. There have been no adverse judgments imposed by the UKGC against us. In recent months, we reduced our spending on marketing and were focused on retaining existing customers and reactivating past customers. On November 10, 2022, we determined that we would close down our licensed remote gambling operation in the UK market. On November 15, 2022, as part of the winding down of the Argyll UK iGaming operations, players were informed that they would no longer be able to place bets from November 30, 2022 and that they could withdraw their balances through December 7, 2022. On December 8, 2022 Argyll UK surrendered its UK license and the surrender was confirmed by the UKGC on December 9, 2022. Between December 7, 2022 and December 14, 2022 Argyll UK attempted to refund customer accounts that still had remaining balances. As of December 31, 2022, approximately $200,000 still remained to be refunded to customers. Going forward, Argyll UK will comply with requests for refunds to the extent required by law and in accordance with Argyll UK's terms and conditions.

***We are subject to various laws relating to trade, export controls, and foreign corrupt practices, the violation of which could adversely affect our operations, reputation, business, prospects, operating results and financial condition.***

We are subject to risks associated with doing business outside of the United States, including exposure to complex foreign and U.S. regulations such as the Foreign Corrupt Practices Act (the "FCPA") and other anti-corruption laws which generally prohibit U.S. companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or retaining business. Violations of the FCPA and other anti-corruption laws may result in severe criminal and civil sanctions and other penalties. It may be difficult to oversee the conduct of any contractors, third-party partners, representatives or agents who are not our employees, potentially exposing us to greater risk from their actions. If our employees or agents fail to comply with applicable laws or company policies governing our international operations, we may face legal proceedings and actions which could result in civil penalties, administration actions and criminal sanctions. Any determination that we have violated any anti-corruption laws could have a material adverse impact on our business. Changes in trade sanctions laws may restrict our business practices, including cessation of business activities in sanctioned countries or with sanctioned entities.

Violations of these laws and regulations could result in significant fines, criminal sanctions against us, our officers or our employees, requirements to obtain export licenses, disgorgement of profits, cessation of business activities in sanctioned countries, prohibitions on the conduct of our business and our inability to market and sell our products in one or more countries. Additionally, any such violations could materially damage our reputation, brand, international expansion efforts, ability to attract and retain employees and our business, prospects, operating results and financial condition.

We also deal with significant amounts of cash in our operations and are subject to various reporting and anti-money laundering regulations. Any violation of anti-money laundering laws or regulations by any of our properties could have a material adverse impact on our business.

***We are subject to regulation affecting internet gaming which varies from one jurisdiction to another and future legislative and court proceedings pertaining to internet gaming may have a material impact on our operations and financial results.***

Online gambling is not unequivocally legal in all jurisdictions. We are licensed to supply gambling services from jurisdictions in which we operate but not in every jurisdiction where the customer is located. Some countries have introduced regulations attempting to restrict or prohibit internet gaming, while others have taken the position that internet gaming should be regulated and have adopted or are in the process of considering legislation to enable that regulation.

While the UK and other European countries and territories such as Malta, Alderney and Gibraltar have currently adopted a regime which permits its licensees to accept wagers from any jurisdiction, other countries, including the United States, have, or are in the process of implementing, regimes which permit only the targeting of the domestic market provided a local license is obtained and local taxes accounted for. Other European countries and territories continue to defend a licensing regime that protects monopoly providers and have combined this with an attempt to outlaw all other suppliers. By contrast, a number of countries have not passed legislation in relation to online gambling but may introduce it in the future. Some jurisdictions have not updated legislation focused on land-based gambling which may be interpreted in an unfavorable way to online gambling. Different jurisdictions have different views to determining where gambling takes place and which jurisdiction's law applies and these views may change from time to time.

We currently block, through IP address filtering, direct access to wagering on our international websites from the United States and other jurisdictions that we are precluded from supplying our services to pursuant to our gaming licenses. Individuals are required to enter their age upon gaining access to our platform and any misrepresentation of such users age will result in the forfeiting of his or her deposit and any withdrawals from such users account requires proof of government issued identification. In addition, our payment service providers use their own identity and ISP verification software. Despite all such measures, it is conceivable that a user, underage or otherwise, could devise a way to evade our blocking measures and access our international websites from the United States or any other foreign jurisdiction in which we do not currently permit users to use our services.

Future legislative and court decisions may have a material impact on our operations and financial results. Therefore, there is a risk that civil and criminal proceedings, including class actions brought by or on behalf of prosecutors or public entities incumbent monopoly providers, or private individuals, could be initiated against us, internet service providers, credit card processors, advertisers and others involved in the internet gaming industry. Such potential proceedings could involve substantial litigation expense, penalties, fines, seizure of assets, injunctions or other restrictions being imposed upon our or our licensees or other business partners, while diverting the attention of key executives. Such proceedings could have a material adverse effect on our business, revenues, operating results and financial condition as well as impact upon our reputation.

There can be no assurance that legally enforceable prohibiting legislation will not be proposed and passed in jurisdictions relevant or potentially relevant to our business to legislate or regulate various aspects of the internet or the online gaming industry (or that existing laws in those jurisdictions will not be interpreted negatively). Compliance with any such legislation may have a material adverse effect on our business, financial condition and results of operations, either as a result of our determining that a jurisdiction should be blocked, or because a local license may be costly for us or our licensees to obtain and/or such licenses may contain other commercially undesirable conditions. In any case, such regulations may negatively impact our business and financial results.

***We may not be able to capitalize on the expansion of online or other forms of interactive gaming or other trends and changes in the gaming industry, due to laws and regulations governing these industries in different Jurisdictions.***

We participate in the new and evolving interactive gaming industry through our online, social and mobile products. We intend to take advantage of the liberalization of online and mobile gaming, within Canada, the U.S. and internationally; however, expansion of online and mobile gaming involves significant risks and uncertainties, including legal, business and financial risks. The success of online and mobile gaming and our interactive products and services may be affected by future developments in social networks, including Facebook, mobile platforms, regulatory developments, data privacy laws and other factors that we are unable to predict and are beyond our control. Consequently, our future operating results relating to our online gaming products and services are difficult to predict, and we cannot provide assurance that our products and services will grow at expected rates or be successful in the long term.

Additionally, our ability to successfully pursue our interactive gaming strategy depends on the laws and regulations relating to wagering through interactive channels. Internationally, laws relating to online gaming are evolving, particularly in Europe. To varying degrees, a number of European governments have taken steps to change the regulation of online wagering through the implementation of new or revised licensing and taxation regimes, including the possible imposition of sanctions on unlicensed providers. We cannot predict the timing, scope or terms of any such state, federal or foreign laws and regulations, or the extent to which any such laws and regulations will facilitate or hinder its interactive strategy.

Our ability to operate in our proposed online jurisdictions or expand in new online jurisdictions could be adversely affected by new or changing laws or regulations, new interpretations of existing laws or regulations, and difficulties or delays in obtaining or maintaining required licenses or product approvals.

Changes in existing gaming laws or regulations, new interpretations of existing gaming laws or regulations or changes in the manner in which existing laws and regulations are enforced, all with respect to online gaming activities, may hinder or prevent us from continuing to operate in those jurisdictions where we currently carry on business, which would harm our operating results and financial condition. Furthermore, gaming regulatory bodies may from time to time amend the various disclosures and reporting requirements. If we fail to comply with any existing or future disclosure or reporting requirements, the regulators may take action against us which could ultimately include fines, the conditioning, suspension or revocation of approvals, registrations, permits or licenses and other disciplinary action. It cannot be assured that we will be able to adequately adjust to such potential changes. Additionally, evolving laws and regulations regarding data privacy, cyber security and anti-money laundering could adversely impact opportunities for growth in our online business, and could result in additional compliance-related costs.

Public opinion can also exert a significant influence over the regulation of the gaming industry. A negative shift in the public's perception of gaming could affect future legislation in different jurisdictions. Among other things, such a shift could cause jurisdictions to abandon proposals to legalize gaming, thereby limiting the number of new jurisdictions into which we could expand. Negative public perception could also lead to new restrictions on or to the prohibition of gaming in jurisdictions in which we currently operate.

***Recent regulatory changes in the Netherlands and Finland have had a material impact on our financial results and may have additional negative consequences on our business and operations in the future.***

As a result of a new licensing regime that was implemented in the Netherlands for online gaming operators, during fiscal year 2022, we discontinued our iGaming operations in this market and net revenues for our Bethard business (excluding Spain) declined from approximately $5.6 million for the three months ended September 30, 2021 to approximately $2.7 million for the three months ended September 30, 2022. Net revenues for our Bethard business (excluding Spain) represented approximately 29% of our total net revenues for, respectively, the three months ended September 30, 2022.

In addition, as a result of regulatory developments in Finland, we received communications requesting clarification on our marketing and gaming practices related to its Finnish EEG iGaming operations, from the Finnish regulator. The net revenues for our Lucky Dino business have declined from approximately $6.5 million for the three months ended March 31, 2022 to approximately $3.1 million for the three months ended September 30, 2022. Net revenues for our Lucky Dino business represented approximately 33% of our consolidated net revenues for the three months ended September 30, 2022.

There can be no assurance that operations and revenues from our Finnish and other iGaming operations will recover and not be further negatively impacted in the future.

***Regulations that may be adopted with respect to the internet and electronic commerce may decrease the growth in the use of the internet and lead to the decrease in the demand for our products and services.***

In addition to regulations pertaining to the gaming industry in general and specifically to online gaming, we may become subject to any number of laws and regulations that may be adopted with respect to the internet and electronic commerce. New laws and regulations that address issues such as user privacy, pricing, online content regulation, taxation, advertising, intellectual property, information security, and the characteristics and quality of online products and services may be enacted. Additionally, current laws, which predate or are incompatible with the internet and electronic commerce, may be applied and enforced in a manner that restricts the electronic commerce market. The application of such pre-existing laws regulating communications or commerce in the context of the internet and electronic commerce is uncertain. Moreover, it may take years to determine the extent to which existing laws relating to issues such as intellectual property ownership and infringement, libel and personal privacy are applicable to the internet. The adoption of new laws or regulations relating to the internet, or particular applications or interpretations of existing laws, could decrease the growth in the use of the internet, decrease the demand for our products and services, increase our cost of doing business or could otherwise have a material adverse effect on our business, revenues, operating results and financial condition.

***Our stockholders and business partners are subject to extensive governmental regulation and if a stockholder is found unsuitable by a gaming authority, that stockholder would not be able to beneficially own our Common Shares directly or indirectly.***

In many jurisdictions, gaming laws can require any of our stockholders and business partners to file an application, be investigated, and qualify or have his, her or its suitability determined by gaming authorities. Gaming authorities have very broad discretion in determining whether an applicant should be deemed suitable. Subject to certain administrative proceeding requirements, the gaming regulators have the authority to deny any application or limit, condition, restrict, revoke or suspend any license, registration, finding of suitability or approval, or fine any person licensed, registered or found suitable or approved, for any cause deemed reasonable by the gaming authorities.

Furthermore, any person required by a gaming authority to be found suitable, who is found unsuitable by the gaming authority, may not hold directly or indirectly ownership of any voting security or the beneficial or record ownership of any non-voting security or any debt security of any public corporation which is registered with the relevant gaming authority beyond the time prescribed by the relevant gaming authority. A violation of the foregoing may constitute a criminal offence. A finding of unsuitability by a particular gaming authority impacts that person's ability to associate or affiliate with gaming licenses in that particular jurisdiction and could impact the person's ability to associate or affiliate with gaming licenses in other jurisdictions.

Many jurisdictions also require any person who acquires beneficial ownership of more than a certain percentage of voting securities of a gaming company and, in some jurisdictions, non-voting securities, typically 5%, to report the acquisition to gaming authorities, and gaming authorities may require such holders to apply for qualification or a finding of suitability, subject to limited exceptions for "institutional investors" that hold a company's voting securities for investment purposes only.

Thus, any purchaser of the common stock offered through this prospectus may find themselves subject to investigation and potentially required to disgorge their shares due to regulatory action in one of the jurisdictions we operate.

Current environmental laws and regulations, or those enacted in the future, could result in additional liabilities and costs. Compliance with these laws could increase our costs and impact the availability of components required to manufacture its products. Violation of these laws may subject us to significant fines, penalties or disposal costs, which could negatively impact its results of operations, financial position or cash flows.

***Legislative and regulatory changes could negatively affect our business and the business of our customers.***

Legislative and regulatory changes may affect demand for or place limitations on the placement of our products. Such changes could affect us in a variety of ways. Legislation or regulation may introduce limitations on our products or opportunities for the use of our products and could foster competitive products or solutions at our or our customers' expense. Our business will likely also suffer if our products become obsolete due to changes in laws or the regulatory framework.

Legislative or regulatory changes negatively impacting the gaming industry as a whole or our customers in particular could also decrease the demand for our products. Opposition to gaming could result in restrictions or even prohibitions of gaming operations in any jurisdiction or could result in increased taxes on gaming revenues. Tax matters, including changes in state, federal or other tax legislation or assessments by tax authorities could have a negative impact on our business. A reduction in growth of the gaming industry or in the number of gaming jurisdictions or delays in the opening of new or expanded casinos could reduce demand for our products. Changes in current or future laws or regulations or future judicial intervention in any particular jurisdiction may have a material adverse effect on our existing and proposed foreign and domestic operations. Any such adverse change in the legislative or regulatory environment could have a material adverse effect on our business, results of operations or financial condition.

***In the context of our European Union (the "EU")-facing operations, we may be subject to specific compliance obligations under the General Data Protection Regulation (EU) 2016/679 (the "GDPR") and associated laws and regulations in different EU Member States in which we operate as well as in portions of our business outside the EU which may negatively affect our operations and financial results.***

Every international business that has a presence in the EU as well as multiple data protection jurisdictions is subject to an impact on its operations placed by its obligation to comply with the requirements of the GDPR and associated EU legislation with respect to the offering of products or services to, or the monitoring of, individuals in the EU. We may also be subject to the local privacy and data protection laws of the EU Member States in which we offer products or services. Failure to comply with these EU data protection and privacy laws, can carry penalties and potential criminal sanctions, as well as the risk of litigation. In addition, Directive 2002/58/EC (as amended by Directive 2009/136/EC) (together, the "e-Privacy Directive") governs, among other things, the use of cookies and the sending of electronic direct marketing within the EU and, as such, will apply to our marketing activities within the EU. Following Brexit, the UK has adopted its own data protection and direct marketing laws (the "UK data protection laws") which are currently based on the corresponding EU legislation. Our UK-facing operations may therefore be subject to specific compliance obligations under the UK data protection laws.

In our efforts to comply with these requirements, we rely on positions and interpretations of the law that have yet to be fully tested before the relevant courts and regulators. While the UK data protection laws are currently similar to the corresponding EU laws, it is possible that those laws will diverge in the future. To the extent that those laws do diverge, then that may increase the costs of maintaining regulatory compliance. There is also a risk that it may become more difficult to make cross-border transfers of personal data, as a result of diverging data protection regimes in the territories where our customers are located and the territories where our operations are based. If a regulator or court of competent jurisdiction determined that one or more of our compliance efforts does not satisfy the applicable requirements of the GDPR or the e-Privacy Directive, or the UK data protection laws, or if any party brought a claim in this regard, there could be potential governmental or regulatory investigations, enforcement actions, regulatory fines, compliance orders, litigation or public statements against us by consumer advocacy groups or others, and that could cause customers to lose trust in us and damage our reputation. Likewise, a change in guidance could be costly and have an adverse effect on our business.

**Risks Related to Intellectual Property and Technology**

***Our intellectual property may be insufficient to properly safeguard our technology and brands.***

We may apply for patent protection in the United States, Canada, Europe and other countries relating to certain existing and proposed processes, designs and methods and other product innovations. Patent applications can, however, take many years to issue and we can provide no assurance that any of these patents will be issued at all. If we are denied any or all of these patents, we may not be able to successfully prevent our competitors from imitating our solutions or using some or all of the processes that are the subject of such patent applications. Such imitation may lead to increased competition within the finite market for our solutions. Even if pending patents are issued to us, our intellectual property rights may not be sufficiently comprehensive to prevent our competitors from developing similar competitive products and technologies. Our success may also depend on our ability to obtain trademark protection for the names or symbols under which we market our products and to obtain copyright protection and patent protection of our proprietary technologies, intellectual property and other game innovations and if the granted patents are challenged, protection may be lost. We may not be able to build and maintain goodwill in our trademarks or obtain trademark or patent protection, and there can be no assurance that any trademark, copyright or issued patent will provide competitive advantages for us or that our intellectual property will not be successfully challenged or circumvented by competitors.

Computer source codes for technology licenses may also receive protection under international copyright laws. As such, we, or the party which we license the source code from, may need to initiate legal proceedings following such use to obtain orders to prevent further use of the source code.

We will also rely on trade secrets, ideas and proprietary know-how. Although we generally require our employees and independent contractors to enter into confidentiality and intellectual property assignment agreements, it cannot be assured that the obligations therein will be maintained and honored. If these agreements are breached, it is unlikely that the remedies available to us will be sufficient to compensate it for the damages suffered. In spite of confidentiality agreements and other methods of protecting trade secrets, our proprietary information could become known to or independently developed by competitors.

If we fail to adequately protect our intellectual property and confidential information, our business may be harmed, and our liquidity and results of operations may be materially adversely impacted.

***If we are subject to claims of intellectual property infringement or invalidity our business operations and/or financial results may be negatively impacted either by the cost of litigation or any adverse result.***

Monitoring infringement and misappropriation of intellectual property can be difficult and expensive, and we may not be able to detect infringement or misappropriation of our proprietary rights. Although we intend to aggressively pursue anyone who is reasonably believed to be infringing upon our intellectual property rights and who poses a significant commercial risk to the business, to protect and enforce our intellectual property rights, initiating and maintaining suits against such third parties will require substantial financial resources. We may not have the financial resources to bring such suits, and, if we do bring such suits, we may not prevail. Regardless of our success in any such actions, the expenses and management distraction involved may have a material adverse effect on our financial position.

A significant portion of our revenues may be generated from products using certain intellectual property rights, and our operating results would be negatively impacted if we were unsuccessful in licensing certain of those rights and/or protecting those rights from infringement, including losses of proprietary information from breaches of our cyber security efforts.

Further, our competitors have been granted patents protecting various gaming products and solutions features, including systems, methods and designs. If our products and solutions employ these processes, or other subject matter that is claimed under our competitors' patents, or if other companies obtain patents claiming subject matter that we use, those companies may bring infringement actions against us. The question of whether a product infringes a patent involves complex legal and factual issues, the determination of which is often uncertain. In addition, because patent applications can take many years to issue, there may be applications now pending of which we are unaware, which might later result in issued patents that our products and solutions may infringe. There can be no assurance that our products, including those with currently pending patent applications, will not be determined to have infringed upon an existing third-party patent. If any of our products and solutions infringes a valid patent, we may be required to discontinue offering certain products or systems, pay damages, purchase a license to use the intellectual property in question from its owner, or redesign the product in question to avoid infringement. A license may not be available or may require us to pay substantial royalties, which could in turn force us to attempt to redesign the infringing product or to develop alternative technologies at a considerable expense. Additionally, we may not be successful in any attempt to redesign the infringing product or to develop alternative technologies, which could force us to withdraw our product or services from the market.

We may also infringe other intellectual property rights belonging to third parties, such as trademarks, copyrights and confidential information. As with patent litigation, the infringement of trademarks, copyrights and confidential information involve complex legal and factual issues and our products, branding or associated marketing materials may be found to have infringed existing third-party rights. When any third-party infringement occurs, we may be required to stop using the infringing intellectual property rights, pay damages and, if we wish to keep using the third-party intellectual property, purchase a license or otherwise redesign the product, branding or associated marketing materials to avoid further infringement. Such a license may not be available or may require us to pay substantial royalties.

It is also possible that the validity of any of our intellectual property rights might be challenged either in a standalone legal proceeding or as part of infringement claims in the future.

There can be no assurance that our intellectual property rights will withstand an invalidity claim and, if declared invalid, the protection afforded to the product, branding or marketing material will be lost.

Moreover, the future interpretation of intellectual property law regarding the validity of intellectual property by governmental agencies or courts in the United States, Canada, Europe or other jurisdictions in which we have rights could negatively affect the validity or enforceability of our current or future intellectual property. This could have multiple negative impacts including, without limitation, the marketability of, or anticipated revenue from, certain of our products. Additionally, due to the differences in foreign patent, trademark, copyright and other laws concerning proprietary rights, our intellectual property may not receive the same degree of protection in foreign countries as it would in the United States, Canada, or Europe. Our failure to possess, obtain or maintain adequate protection of its intellectual property rights for any reason in these jurisdictions could have a material adverse effect on its business, results of operations and financial condition.

Furthermore, infringement and other intellectual property claims, with or without merit, can be expensive and time-consuming to litigate, and we may not have the financial and human resources to defend ourselves against any infringement suits that may be brought against us. Litigation can also distract management from day-to-day operations of the business.

In addition, our business is dependent in part on the intellectual property of third-parties. For example, we license intellectual property from third parties for use in our gaming products. Our future success may depend upon our ability to obtain licenses to use new and existing intellectual property and our ability to retain or expand existing licenses for certain products. If we are unable to obtain new licenses or renew or expand existing licenses, we may be required to discontinue or limit our use of such products that use the licensed marks and our financial condition, operating results or prospects may be harmed.

***If we fail to enforce and maintain our intellectual property rights, our business and financial results could be adversely affected.***

The success of our business depends on our continued ability to use our existing tradenames in order to increase our brand awareness. Esports Entertainment Malta owns EU registered trademarks for our Lucky Dino brands, and we control the Bethard brands of Bethard, Fastbet and Betive. As of the date hereof, we do not have any federally registered trademarks owned by us in relation to the Vie.gg brand, but we plan to pursue registered trademarks for Vie.gg and the Esports Entertainment Group. The unauthorized use or other misappropriation of any of the foregoing trademarks or tradenames could diminish the value of our business or financial results which would have a material adverse effect on our financial condition and results of operation.

***Compromises of our technology systems or unauthorized access to confidential information or our customers' personal information could materially harm our reputation and business.***

We collect and store confidential, personal information relating to our customers for various business purposes, including marketing and financial purposes, and credit card information for processing payments. For example, we handle, collect and store personal information in connection with our online gaming products. We may share this personal and confidential information with vendors or other third parties in connection with processing of transactions, operating certain aspects of our business or for marketing purposes. Our collection and use of personal data is governed by federal, state and provincial laws and regulations as well as the applicable laws and regulations in other countries in which it operates. Privacy law is an area that changes often and varies significantly by jurisdiction. We may incur significant costs in order to ensure compliance with the various privacy requirements. In addition, privacy laws and regulations may limit our ability to market to our customers.

We intend to assess and monitor the security of collection, storage and transmission of customer information on an ongoing basis. We intend to utilize commercially available software and technologies to monitor, assess and secure our network. However, the systems currently intended for transmissions and approval of payment card transactions, and the technology utilized in payment cards themselves, all of which can put payment card data at risk, are determined and controlled by the payment card industry, not us. Although we intend to take steps designed to safeguard our customers' confidential personal information, our network and other systems and those of third parties, such as service providers, could be compromised by a third-party breach of our system's security or that of a third-party provider or as a result of purposeful or accidental actions of third parties, our employees or those employees of a third party. Advances in computer and software capabilities and encryption technology, new tools and other developments may increase the risk of such a breach. As a result of any security breach, customer information or other proprietary data may be accessed or transmitted by or to a third party. Despite these measures, there can be no assurance that we are adequately protecting our customers' information.

Any loss, disclosure or misappropriation of, or access to, customers' or other proprietary information or other breach of our information security could result in legal claims or legal proceedings, including regulatory investigations and actions, or liability for failure to comply with privacy and information security laws, including for failure to protect personal information or for misusing personal information, which could disrupt our operations, damage our reputation and expose us to claims from our customers, financial institutions, regulators, payment card associations, employees and other persons, any of which could have a material adverse effect on our business, revenues, financial conditions and operations.

***Service interruptions of internet service providers could impair our ability to carry on our business.***

Most of our customers will rely on internet service providers to allow our customers and servers to communicate with each other. If internet service providers experience service interruptions, communications over the internet may be interrupted and impair our ability to carry on business. In addition, our ability to process e-commerce transactions depends on bank processing and credit card systems. In order to prepare for system problems, we intend to continuously seek to strengthen and enhance our planned facilities and the capability of our system infrastructure and support. Nevertheless, any system failure as a result of reliance on third parties, including network, software or hardware failure, which causes a delay or interruption in our online services and products and e-commerce services, could have a material adverse effect on our business, revenues, operating results and financial condition.

***Disruption of our network systems or their inability to meet the growing demand can negatively affect our business and financial results.***

The growth of internet usage has caused frequent interruptions and delays in processing and transmitting data over the internet. There can be no assurance that the internet infrastructure or our own network systems will be able to meet the demand placed on it by the continued growth of the internet, the overall online gaming and interactive entertainment industry and our customers.

The internet's viability as a medium for products and services offered by us could be affected if the necessary infrastructure is not sufficient, or if other technologies and technological devices eclipse the internet as a viable channel.

End-users of our products and services will depend on internet service providers and our system infrastructure (or those of our licensed partners) for access to our or our licensees' products and services. Many of these services have experienced service outages in the past and could experience service outages, delays and other difficulties due to system failures, stability or interruption.

***Systems, network or telecommunications failures or cyber-attacks may disrupt our business and have an adverse effect on our results of operations****.*

Any disruption in our network or telecommunications services could affect our ability to operate our games and online offerings, which would result in reduced revenues and customer down time. our network and databases of business or customer information, including intellectual property, trade secrets, and other proprietary business information and those of third parties we utilize, will be susceptible to outages due to fire, floods, power loss, break-ins, cyber-attacks, hackers, network penetration, data privacy or security breaches, denial of service attacks and similar events, including inadvertent dissemination of information due to increased use of social media. Despite implementation of network security measures and data protection safeguards by us, including a disaster recovery strategy for back office systems, our servers and computer resources will be vulnerable to viruses, malicious software, hacking, break-ins or theft, third-party security breaches, employee error or malfeasance, and other potential compromises. Disruptions from unauthorized access to or tampering with our computer systems, or those of third parties we utilize, in any such event could result in a wide range of negative outcomes, including devaluation of our intellectual property goodwill and/or brand appeal, increased expenditures on data security, and costly litigation, and can have a material adverse effect on our business, revenues, reputation, operating results and financial condition.

***Malfunctions of third-party communications infrastructure, hardware and software expose us to a variety of risks that we cannot control.***

Our business will depend upon the capacity, reliability and security of the infrastructure owned by third parties over which our offerings would be deployed. We have no control over the operation, quality or maintenance of a significant portion of that infrastructure or whether or not those third parties will upgrade or improve their equipment. We depend on these companies to maintain the operational integrity of our connections. If one or more of these companies is unable or unwilling to supply or expand our levels of service in the future, our operations could be adversely impacted. Also, to the extent the number of users of networks utilizing our future products and services suddenly increases, the technology platform and secure hosting services which will be required to accommodate a higher volume of traffic may result in slower response times or service interruptions. System interruptions or increases in response time could result in a loss of potential or existing users and, if sustained or repeated, could reduce the appeal of the networks to users. In addition, users depend on real-time communications; outages caused by increased traffic could result in delays and system failures. These types of occurrences could cause users to perceive that our products and services do not function properly and could therefore adversely affect our ability to attract and retain licensees, strategic partners and customers.

**Risks Related to Our Common Stock**

***The trading price of our Common Stock has been, and will likely continue to be, volatile and as a result you could lose all or part of your investment due to dips in the market price cause by market fluctuations.***

The trading price of our Common Stock has been, and will likely continue to be, volatile and subject to wide fluctuations in response to various factors, some of which are beyond our control. Any of the factors listed below could have a material adverse effect on your investment in our Common Stock and our Common Stock may trade at prices significantly below the price you paid for them. In such circumstances, the trading price of our securities may not recover and may experience a further decline.

Factors affecting the trading price of our Common Stock may include:

● actual or anticipated fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to us;

● changes in the market's expectations about our operating results;

● success of competitors;

● lack of adjacent competitors;

● our results failing to meet the expectation of securities analysts or investors in a particular period;

● changes in financial estimates and recommendations by securities analysts concerning us or the industries in which we operate in general;

● our ability to market new and enhanced products and services on a timely basis;

● commencement of, or involvement in, litigation involving us;

● changes in our capital structure, such as future issuances of securities or the incurrence of additional debt;

● the volume of shares of our Common Stock by our directors, executive officers or significant stockholder or the perception that such sales could occur; and

● general economic and political conditions such as recessions, interest rates, fuel prices, international currency fluctuations and acts of war or terrorism.

Broad market and industry factors may materially harm the market price of our Common Stock irrespective of our operating performance. The stock market in general, and Nasdaq in particular, has experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the affected companies. The trading prices and valuations of these stocks, and of our Common Stock, may not be predictable. A loss of investor confidence in the market for the stocks of other companies which investors perceive to be similar to us could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our Common Stock also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

***We may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could affect our stock price and cause you to lose some or all of your investment.***

We may be forced to write-down or write-off assets, restructure our operations, or incur impairment or other charges that could result in losses. Even though these charges may be non-cash items and not have an immediate impact on our liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. The result of these charges may thus be to negatively affect the price of our Common Stock causing stockholders to suffer a reduction in the value of their shares.

***The coverage of business or our Common Stock by securities or industry analysts or the absence thereof could adversely affect the price of our securities and trading volume.***

The trading market for our Common Stock is influenced in part by the research and other reports that industry or securities analysts publish about us or our business or industry from time to time. We do not control these analysts, or the content and opinions included in their reports. Analysts who publish information about our securities may have had relatively little experience with our company given our history, which could affect their ability to accurately forecast our results and make it more likely that we fail to meet their estimates. If analysts do cover us and one or more of them downgrade our securities, or if they issue other unfavorable commentary about us or our industry or inaccurate research, our stock price would likely decline. Furthermore, if one or more of these analysts cease coverage or fail to regularly publish reports on us, we could lose visibility in the financial markets. Any of the foregoing would likely cause our stock price and trading volume to decline.

***We currently do not intend to pay dividends on our Common Stock. As a result, your only opportunity to achieve a return on your investment is if the price of our Common Stock appreciates.***

We currently do not expect to declare or pay dividends on our Common Stock. In addition, in the future we may enter into agreements that prohibit or restrict our ability to declare or pay dividends on our Common Stock. As a result, your only opportunity to achieve a return on your investment will be if the market price of our Common Stock appreciates and you sell your shares at a profit.

***You may experience dilution of your ownership interest due to the future issuance of additional shares of our Common Stock.***

We are in a capital-intensive business and we do not have sufficient funds to finance the growth of our business or to support our projected capital expenditures. As a result, we will require additional funds from future equity or debt financings, including sales of preferred shares or convertible debt, to complete the development of new projects and pay the general and administrative costs of our business. We may in the future issue our previously authorized and unissued securities, resulting in the dilution of the ownership interests of holders of our Common Stock. We are currently authorized to issue 500 million shares of Common Stock and 10 million shares of preferred stock. Additionally, the Board may subsequently approve increases in authorized Common Stock. The potential issuance of such additional shares of common or preferred stock or convertible debt may create downward pressure on the trading price of our Common Stock. We may also issue additional shares of Common Stock or other securities that are convertible into or exercisable for Common Stock in future public offerings or private placements for capital raising purposes or for other business purposes. The future issuance of a substantial number of common shares into the public market, or the perception that such issuance could occur, could adversely affect the prevailing market price of our common shares. A decline in the price of our common shares could make it more difficult to raise funds through future offerings of our common shares or securities convertible into common shares.

Sales of a substantial number of shares of our Common Stock in the public market could occur at any time, either by us or our stockholders. Actual sales of our Common Stock, or the perception in the market that we or holders of a large number of shares intend to sell shares, could reduce the market price of our Common Stock. Our outstanding shares of Common Stock may be freely sold in the public market at any time to the extent permitted by the Securities Act or to the extent such shares have already been registered under the Securities Act and are held by non-affiliates.

***The exercise of our outstanding options and warrants may result in significant dilution to our stockholders.***

As of September 30, 2022, we had outstanding options to purchase up to 1.0 million shares of our Common Stock and subsequently we have entered into an agreement to issue an award of 2.5 million time-based stock options with our new CEO, for options to purchase a total of 3.5 million shares of Common Stock. In addition, as of September 30, 2022, we had outstanding warrants to purchase up to approximately 56.2 million shares of our Common Stock. Subsequent to September 30, 2022 we issued pre-funded warrants to purchase another 17.9 million shares of our common stock for a total of 74.1 million warrants outstanding as of December 31, 2022. The exercise of a significant portion of our outstanding options and warrants may result in significant dilution to our stockholders.

***We may issue preferred stock with terms that could dilute the voting power or reduce the value of our Common Stock.***

Our Amended and Restated Articles of Incorporation authorizes us to issue, without stockholder approval, one or more series of preferred stock having such designation, powers, privileges, preferences, including preferences over our Common Stock with respect to dividends and distributions, terms of redemption and relative participation, optional, or other rights, if any, of the shares of each such series of preferred stock and any qualifications, limitations or restrictions thereof, as our Board may determine. The terms of one or more series of preferred stock could dilute the voting power or reduce the value of our Common Stock. For example, the repurchase or redemption rights or liquidation preferences we could assign to holders of preferred stock could affect the residual value of our Common Stock.

***Our Amended and Restated Articles of Incorporation allows for our Board to create new series of preferred stock without further approval by our stockholders, which could have an anti-takeover effect and could adversely affect holders of our Common Stock.***

Our authorized capital includes preferred stock issuable in one or more series. Our Board has the authority to issue preferred stock and determine the price, designation, rights, preferences, privileges, restrictions and conditions, including voting and dividend rights, of those shares without any further vote or action by stockholders. The rights of the holders of Common Stock will be subject to, and may be adversely affected by, the rights of holders of any preferred stock that may be issued in the future. The issuance of additional preferred stock, while providing desirable flexibility in connection with possible financings and acquisitions and other corporate purposes, could make it more difficult for a third party to acquire a majority of the voting power of our outstanding voting securities, which could deprive our holders of Common Stock of a premium that they might otherwise realize in connection with a proposed acquisition of our company.

On November 10, 2021, we designated 1,725,000 shares of preferred stock as 10% Series A Cumulative Redeemable Convertible Preferred Stock ("10% Series A Cumulative Redeemable Convertible Preferred Stock"), with a par value of $0.001 per share and liquidation value of $11.00. On November 11, 2021, we announced that we priced an underwritten public offering of preferred stock as 10% Series A Cumulative Redeemable Convertible Preferred Stock in the first series issuance of preferred stock, of which 0.8 million shares were issued at $10 per share on November 16, 2021 for total gross proceeds of $8.0 million, before deducting underwriting discounts and other estimated offering expenses. Net proceeds from the sale, after deducting issuance costs totaled $7.3 million.

In addition, under the terms of the underwriting agreement for the public offering of the 10% Series A Cumulative Redeemable Convertible Preferred Stock, the Company granted the underwriters a 45-day option to purchase up to an additional 0.12 million shares. On December 10, 2021, there was a partial exercise to purchase 35,950 shares. Net proceeds from the additional sale, after deducting issuance costs, totaled $0.3 million.

Each share of 10% Series A Cumulative Redeemable Convertible Preferred Stock is convertible into one share of Common Stock at a conversion price of $17.50 per common share. Subject to earlier conversion or redemption, the 10% Series A Cumulative Redeemable Convertible Preferred Stock matures five years from issuance, or November 15, 2026, at which point we must redeem the shares of 10% Series A Cumulative Redeemable Convertible Preferred Stock in cash.

Dividends on the 10% Series A Cumulative Redeemable Convertible Preferred Stock accrue daily and are cumulative from the date of issuance. The dividends on the 10% Series A Cumulative Redeemable Convertible Preferred Stock are payable monthly in arrears on the last day of each calendar month, when, as and if declared by our Board, at the rate of 10.0% per annum. In the event the dividends are not paid in cash, the dividends shall continue to accrue at a dividend rate of 10.0%.

The 10% Series A Cumulative Redeemable Convertible Preferred Stock is also redeemable, at the option of the Board, in whole or in part, at any time on or after January 1, 2023.

The holders of the 10% Series A Cumulative Redeemable Convertible Preferred Stock will not have any voting rights, except whenever dividends on any share of any series of preferred stock ("Applicable Preferred Stock") have not been paid in an aggregate amount equal to four monthly dividends on the shares, the holders of the Applicable Preferred Stock will have the exclusive and special right, voting separately as a class and without regard to series, to elect at an annual meeting of stockholders or special meeting held in place of it one member of the Board, until all arrearages in dividends and dividends in full for the current monthly period have been paid.

Further, on December 20, 2022, we entered into a Subscription and Investment Representation Agreement with a member of management, who is an accredited investor (the "Purchaser"), pursuant to which we agreed to issue and sell 100 shares of Series B Preferred Stock, par value $0.001 per share (the "Series B Preferred Stock"), to the Purchaser for $10 per share in cash. The sale closed on December 21, 2022.

On December 21, 2022, we filed a Certificate of Designation with the Secretary of State of Nevada, effective as of the time of filing, designating the rights, preferences, privileges and restrictions of the shares of Preferred Stock. The Certificate of Designation provides that 100 shares of Series B Preferred Stock will have 25 million votes each and will vote together with the outstanding shares of our Common Stock as a single class exclusively with respect to any proposal to effect a reverse stock split of our Common Stock. The Series B Preferred Stock will be voted, without action by the holder, on any such proposal in the same proportion as shares of common stock are voted. The Series B Preferred Stock otherwise has no voting rights except as otherwise required by the Nevada Revised Statutes.

The Series B Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities. The Series B Preferred Stock has no rights with respect to any distribution of our assets, including upon a liquidation, bankruptcy, reorganization, merger, acquisition, sale, dissolution or winding up, whether voluntarily or involuntarily. The holder of the Series B Preferred Stock will not be entitled to receive dividends of any kind.

The outstanding shares of Series B Preferred Stock shall be redeemed in whole, but not in part, at any time (i) if such redemption is ordered by the Board in its sole discretion or (ii) automatically upon the effectiveness of stockholder approval of the reverse stock split. Upon such redemption, the holder of the Series B Preferred Stock will receive consideration of $10 per share in cash.

**Miscellaneous Risks of This Investment**

***Efforts to remediate our material weaknesses and comply with the applicable provisions of Section 404 of the Sarbanes-Oxley Act will involve significant expenditures, and non-compliance with Section 404 of the Sarbanes-Oxley Act may adversely affect us and the market price of our Common Stock.***

Under current SEC rules, we have been required to report on our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, and related rules and regulations of the SEC. We will be required to review on an annual basis our internal control over financial reporting, and on a quarterly and annual basis to evaluate and disclose changes in our internal control over financial reporting. This process may result in a diversion of management's time and attention and may involve significant expenditures. We have not maintained internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404 of the Sarbanes-Oxley Act. The rules governing the standards that must be met for our evaluation management to assess our internal control over financial reporting are complex and require significant documentation, testing and possible remediation. We might encounter problems or delays in completing the implementation of any changes necessary to make a favorable assessment of our internal control over financial reporting. If we cannot remediate our material weaknesses or favorably assess the effectiveness of our internal control over financial reporting, investors could lose confidence in our financial information and the price of our Common Stock could decline.

***Anti-takeover provisions in our charter documents and Nevada law could discourage, delay or prevent a change in control of our company and may affect the trading price of our Common Stock and Warrants.***

We are a Nevada corporation and the anti-takeover provisions of the Nevada Revised Statutes may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change in control would be beneficial to our existing stockholders. In addition, our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws may discourage, delay or prevent a change in our management or control over us that stockholders may consider favorable. Our Amended and Restated Articles of Incorporation and/or Amended and Restated Bylaws:

● authorize the issuance of "blank check" preferred stock that could be issued by our Board of Directors to thwart a takeover attempt;

● provide that vacancies on our Board of Directors, including newly created directorships, may be filled by a majority vote of directors then in office;

● place restrictive requirements (including advance notification of stockholder nominations and proposals) on how special meetings of stockholders may be called by our stockholders; do not provide stockholders with the ability to cumulate their votes; and

● provide that our Board of Directors or a majority of our stockholders may amend our bylaws.

***We are a smaller reporting company and a non-accelerated filer and the reduced disclosure requirements available to us may make our Common Stock less attractive to investors.***

The SEC established the smaller reporting company, or SRC, category of companies in 2008, and expanded it in 2018, in an effort to provide general regulatory relief for smaller companies. SRCs may choose to comply with scaled financial and non-financial disclosure requirements in their annual and quarterly reports and registration statements relative to non-SRCs. In addition, companies that are not "accelerated filers" can take advantage of additional regulatory relief. Whether a company is an accelerated filer or a SRC is determined on an annual basis. For so long as we qualify as a non-accelerated filer and/or a SRC, we will be permitted to and we intend to rely on some or all of the accommodations available to such companies. These accommodations include:

● not being required to provide an auditor's attestation of management's assessment of internal control over financial reporting required by Section 404(b) of the Sarbanes-Oxley Act;

● reduced financial disclosure obligations, including that SRCs need only provide two years of financial statements rather than three years; a maximum of two years of acquiree financial statements are required rather than three years; fewer circumstances under which pro forma financial statements are required; and less stringent age of financial statements requirements;

● reduced non-financial disclosure obligations, including regarding the description of their business, management's discussion and analysis of financial condition and results of operations, market risk, executive compensation, transactions with related persons, and corporate governance; and

● later deadlines for the filing of annual and quarterly reports compared to accelerated filers.

We will continue to qualify as a SRC and non-accelerated filer for so long as (a) our public float is less than $75 million as of the last day of our most recently completed second fiscal quarter or (b) our public float is $75 million or more but less than $700 million and we reported annual revenues of less than $100 million for our most recently completed fiscal year.

We may choose to take advantage of some, but not all, of the available accommodations. We cannot predict whether investors will find our Common Stock less attractive if we rely on these accommodations. If some investors find our Common Stock less attractive as a result, there may be a less active trading market for our Common Stock and the price of our Common Stock may be more volatile.

***Public health epidemics or outbreaks, such as COVID-19, could materially and adversely impact our business.***

The novel coronavirus ("COVID-19") emerged in December 2019 and has since adversely impacted global commercial activity, disrupted supply chains and contributed to significant volatility in financial markets. The ongoing impacts of the COVID-19 pandemic has introduced material uncertainty and risk with respect to us and our performance, especially as it relates to in-person attendance at events and game centers.

We have previously indicated that a significant or prolonged decrease in consumer spending on entertainment or leisure activities may have an adverse effect on demand for our product offerings, including in-person access to game centers and tournaments, reducing cash flows and revenues, and thereby materially harming our business, financial condition and results of operations.

The ultimate impact of the COVID-19 pandemic on other areas of the business will depend on future developments, which are uncertain and may result in an extended period of continued business disruption and reduced operations. A materially disruptive resurgence of COVID-19 cases or the emergence of additional variants or strains of COVID-19 could cause other widespread or more severe impacts depending on where infection rates are highest. Any resulting financial impact cannot be reasonably estimated at this time but may have a material adverse impact on our business, financial condition and results of operations. We will continue to monitor developments relating to disruptions and uncertainties caused by COVID-19.

**USE OF PROCEEDS**

We estimate that the net proceeds from the issuance and sale of shares of Common Stock in this offering will be approximately $[●], after deducting the estimated offering expenses payable by us. Our net proceeds will be approximately $[●] if the underwriters exercise their option in full to purchase [●] additional shares of Common Stock from us. This calculation is based upon an assumed public offering price of $[●] per share. The last reported sale price of Common Stock on the Nasdaq Capital Market was $[●] on [●], 2023.

We plan to remit to our Senior Secured Convertible Note Holder, $[●] from these proceeds which will be applied to reduce the principal balance of our Senior Convertible Note. The Senior Convertible Note has a June 2023 maturity date, an interest rate of eight percent (8%), and a default interest rate of twelve percent (12%).

We will have broad discretion in the use of the remaining net proceeds upon satisfying our obligation to the holder of the Senior Convertible Note and payment of offering expenses.

We intend to use the remaining net proceeds of this offering for working capital and general corporate purposes to support ongoing business operations.

**CAPITALIZATION**

The following table sets forth our capitalization as of September 30, 2022:

● On an actual basis;

● On a pro forma, as adjusted basis to give effect to (i) the sale of shares of Common Stock in this offering at the public offering price of $ per share, after deducting underwriting discounts and commissions and other estimated offering expenses payable by us, but giving no effect to the exercise of the over-allotment option; and (ii) the remittance of $(an amount equal to [●] percent ([●]%) of all net proceeds above $[●] following the payment of [●]% in offering fees including Underwriting discounts and commissions) to the holder of the Senior Convertible Note.

This capitalization table should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related notes, and other financial information included in this prospectus.

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| | | |
|:---|:---|:---|
|  | **As of September 30, 2022** | **As of September 30, 2022** |
|  | **Actual**<br> **(Unaudited)** | **Pro Forma,**<br> **As Adjusted**<br> **(Unaudited)** |
| **Assets:** |  |  |
| Cash | $2982179 | $|
| Restricted cash | $1299252 | $|
| **Liabilities:** |  |  |
| Derivative liability <sup>(1)</sup> | $9124756 | $|
| Contingent consideration for Bethard acquisition <sup>(2)</sup> | $3148893 | $|
| Warrant liability <sup>(3)</sup> | 5028462 |  |
| Debt: |  |  |
| Senior convertible note | $32221573 | $|
| Notes payable and other long-term debt | 92726 |  |
| Total Debt | $32314299 | $|
| Mezzanine equity: <sup>(4)</sup> |  |  |
| 10% Series A cumulative redeemable convertible preferred stock, $0.001 par value, 1,725,000 authorized, 835,950 shares issued and outstanding, aggregate liquidation preference $9,195,450 at September 30, 2022 actual and pro forma, as adjusted | $7855924 | $|
| Stockholders' equity: |  |  |
| Preferred stock, $0.001 par value; 10,000,000 shares authorized | $- | $|
| Common stock $0.001 par value; 500,000,000 shares authorized, 70,922,944 shares outstanding as of September 30, 2022 actual (unaudited) and [●] shares outstanding as of September 30, 2022 pro forma, as adjusted | 70923 |  |
| Additional paid-in capital | 147059122 |  |
| Accumulated deficit | (153309017) |  |
| Accumulated other comprehensive loss | (9902592) |  |
| Total stockholders' deficit | $(16081564) | $|
| Total capitalization | $24088659 | $|

---

<sup>(1)</sup> The Company has recorded a derivative liability at September 30, 2022 for the alternate conversion feature embedded within the Senior Convertible Note of $9,124,756. The amount of the derivative liability representing for amounts that may be due to the Holder of the Senior Convertible Note under the provisions of the agreement was determined using a Monte Carlo valuation model. The derivative liability calculation is subject to material fluctuation at each reporting date and the inputs to the valuation model are affected by the share price of the Company, its market capitalization as well as the Company's estimates of credit and non-performance risk.

<sup>(2)</sup> The estimated contingent consideration at September 30, 2022 is based on the estimated fair value of payments due to the sellers in the Bethard acquisition and is calculated based on the estimated revenues that will be generated from the net gaming revenues of the Bethard business through June 2023.

<sup>(3)</sup> The warrant liability at September 30, 2022 includes the fair value of 33,600,000 warrants that had been issued by us in the offering of common stock and warrants on September 19, 2022, the fair value of 15,000,000 warrants that had been issued by us in the offering of common stock and warrants on March 2, 2022, as well as the fair value of 4,000,000 warrants issued to the Holder of our Senior Convertible Note. At September 30, 2022, the warrants issued in connection with the offering on September 19, 2022 had an estimated fair value of $3,804,185, the warrants issued in connection with the offering on March 2, 2022 had an estimated fair value of $1,207,500, and the 4,000,000 warrants issued to the Holder of the Senior Convertible Note, consisting of 2,000,000 Series A Warrants and 2,000,000 Series B Warrants, had an estimated fair value of $16,777 respectively. The Company determined the warrants issued in connection with this offering to be equity classified.

The foregoing table excludes the following as of September 30, 2022:

● 14,758,874
 shares of common stock issuable upon a conversion of the remaining principal outstanding under the Senior Convertible Note, into
 shares of common stock at a floor conversion price of $2.1832;

● Shares
 contingently issuable in connection with the Bethard acquisition, whereby the amount issuable in shares shall be determined prior
 to the 24 month anniversary date of the acquisition, or July 13, 2023, and based on U.S. dollar equivalent of up to a maximum contingent
 share consideration amount of €7,600,000 (equivalent to $8,971,519 using exchange rates in effect at the acquisition date) divided
 by the 30-day volume weighted average unit price per share of common stock at the time of issuance;

● 981,126
 shares of common stock issuable upon the exercise of outstanding stock options with a weighted average exercise price of $6.25;

● 835,950
 shares of 10% Series A Cumulative Redeemable Convertible Preferred Stock that are convertible into one share common stock at a conversion
 price of $17.50 per common share;

● 56,200,558
 shares of common stock issuable upon the exercise of outstanding warrants with a weighted average exercise price of $1.81; and

● 986,810
 shares reserved for future issuances under our equity compensation plan.

**DILUTION**

A purchaser of our shares of our common stock in this offering will be diluted immediately to the extent of the difference between the offering price per share and the as adjusted net tangible book value per share of our common stock upon closing of this offering. Our historical net tangible book value as of September 30, 2022, was a deficit of $(56,224,998), or approximately $(0.7928) per share of outstanding common stock, based on 70,922,944 shares of common stock outstanding as of September 30, 2022. Net tangible book value per share of our common stock is determined at any date by subtracting total liabilities from the amount of total assets, excluding goodwill, intangible assets and right of use assets, and dividing this amount by the number of shares of common stock deemed to be outstanding as of that date.

After giving effect to the sale of shares of our common stock at the offering price of $[●] per share to this offering, our as adjusted net tangible book value as of September 30, 2022 would have been approximately $[●] or approximately $[●] per share of outstanding common stock based on [●] shares of common stock outstanding as adjusted September 30, 2022. This amount represents an immediate increase in net tangible book value of $[●] per share of our common stock to our existing stockholders and an immediate dilution of $[●] per share of our common stock to new investors purchasing securities in this offering, as illustrated in the following table:

The following table illustrates this dilution:

---

| | |
|:---|:---|
| Public offering price per share | $|
| Net tangible book value per share as of September 30, 2022 | $|
| Increase in net tangible book value per share in this offering |  |
| As adjusted net tangible book value per share, after this offering |  |
| Dilution per share to new investors in this offering | $|

---

Each $[●] increase in the assumed public offering price of $[●] per share, which was the last reported sale price of our Common Stock on Nasdaq on [●], 2023, would increase the as-adjusted net tangible book value per share by $[●] per share and decrease the dilution per share to investors participating in this offering by $[●] per share, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

We may also increase or decrease the number of shares we are offering. A[●] share increase in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase the as adjusted net tangible book value per share by approximately $[●] and decrease the dilution per share to new investors participating in this offering by approximately $[●], based on an assumed public offering price of $[●] per share, which was the last reported sale price of our Common Stock on Nasdaq on [●], 2023, remaining the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us. A 1.0 million share decrease in the number of shares offered by us, as set forth on the cover page of this prospectus, would increase the as adjusted net tangible book value per share after this offering by approximately $[●] and increase the dilution per share to new investors participating in this offering by approximately $[●], based on an assumed public offering price of $[●] per share, which was the last reported sale price of our Common Stock on Nasdaq on [●], 2023, remaining the same and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, and excluding the proceeds, if any, from the exercise of the common warrants issued in this offering.

If the underwriters' option to purchase additional shares to cover over-allotments is exercised in full, the as adjusted net tangible book value per share after giving effect to this offering would be $[●] per share, representing an immediate increase to existing stockholders of $[●] per share, and immediate dilution to new investors in this offering of $[●] per share.

The information discussed above is illustrative only and will adjust based on the actual public offering price, the actual number of shares that we offer in this offering, and other terms of this offering determined at pricing.

**UNDERWRITING**

Maxim Group LLC is acting as lead book-running manager and representative of the underwriter in this offering.

Subject to the terms and conditions contained in the underwriting agreement with the underwriters (the "Underwriting Agreement"), each underwriter named below has severally agreed to purchase, and we have agreed to sell to that underwriter, the number of shares set forth opposite such underwriter's name.

---

| | |
|:---|:---|
| **Underwriter** | **Number of shares** |
| Maxim Group LLC | $|
| &nbsp;&nbsp;&nbsp;Total | $|

---

The underwriters intend to agree to purchase all the shares of common stock offered by us other than those covered by the over-allotment option to purchase additional securities described below, if it purchases any such securities, and the underwriters' obligations will be several, which means that each underwriter will be required to purchase a specific number of shares of common stock but is not responsible for the commitment of any other underwriter to purchase any securities. The obligations of the underwriters may be terminated upon the occurrence of certain events to be specified in the underwriting agreement. Furthermore, pursuant to the underwriting agreement, the underwriters' obligations will be subject to customary conditions and representations and warranties contained in the underwriting agreement, such as receipt by the underwriters of officers' certificates and legal opinions.

The underwriters will offer the shares of common stock, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by the representative's counsel and other conditions specified in the underwriting agreement. The underwriters will reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

**Option to Purchase Additional Securities**

We have granted the underwriter an option to purchase from us, at the public offering price, less the underwriting discounts and commissions, up to [●] additional shares of common stock within 45 days from the date of this prospectus. The purchase price to be paid per share of common stock will be equal to the public offering price of one share of common stock, less the underwriting discounts and commissions. If the underwriters exercise the option in full for common stock, the total underwriting discounts and commissions payable will be $[●] and the total proceeds to us, before expenses, will be $[●].

**Indemnification**

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act and liabilities arising from breaches of representations and warranties contained in the underwriting agreement, or to contribute to payments that the underwriters may be required to make in respect of those liabilities.

**Determination of Offering Price**

The actual public offering price of the shares of common stock will be determined by negotiations between us and the underwriters at the time of pricing, and may be at a discount to the current market price of our common stock. Among the factors considered in determining such public offering price will be our historical performance and capital structure, prevailing market conditions, and overall assessment of our business.

**Underwriter Compensation**

We have agreed to sell the shares of common stock to the underwriters at the public offering price of $ per share of common stock, which represents the public offering price of the shares of common stock set forth on the cover page of this prospectus, less the applicable seven percent (7.0%) underwriting discount.

We have also agreed to reimburse the underwriters for accountable legal expenses incurred by it in connection with this transaction in the amount of $100,000. We estimate that the total expenses of the offering payable by us, excluding the total underwriting discount, will be approximately $[●].

**Discount, Commissions and Expenses**

The underwriters have advised us that they propose to offer the shares of common stock at the public offering price set forth on the cover page of this prospectus and to certain dealers at that price less a concession not in excess of $ per share of common stock. After this offering, the public offering price and concession to dealers may be changed by the representative. No such change shall change the amount of proceeds to be received by us as set forth on the cover page of this prospectus. The shares of common stock are offered by the underwriters as stated herein, subject to receipt and acceptance by them and subject to their right to reject any order in whole or in part. The underwriters have informed us that they do not intend to confirm sales to any accounts over which they exercise discretionary authority.

The following table summarizes the underwriting discount we will pay to the underwriters. These amounts are shown assuming both no exercise and full exercise of the over-allotment option.

---

| | | | |
|:---|:---|:---|:---|
|  | **Per Share** | **Total Without**<br> **Over-Allotment**<br> **Option** | **Total With**<br> **Over-Allotment**<br> **Option** |
| Public offering price | $| $| $|
| Underwriting discount (7%) | $| $| $|
| Proceeds, before expense, to us | $| $| $|

---

We have agreed to pay the representative an accountable expense allowance of up to $100,000.

We have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended.

**Lock-Up Agreements and Trading Restrictions**

We, our executive officers and directors have agreed to a 60-day "lock-up" from the closing date of this offering of shares of common stock that they beneficially own. This means that, for a period of 60 days following such closing date, such persons may not offer, sell, pledge or otherwise dispose of these securities without the prior written consent of the representative.

The representative has no present intention to waive or shorten the lock-up period; however, the terms of the lock-up agreements may be waived at its discretion. In determining whether to waive the terms of the lockup agreements, the representative may base its decision on its assessment of the relative strengths of the securities markets and companies similar to ours in general, and the trading pattern of, and demand for, our securities in general.

**Right of First Refusal**

We have also agreed to grant to the representative, for a period of 12 months following the closing of this offering, a right of first refusal to act as sole managing underwriter or sole book runner, sole placement agent or sole sales agent, for any and all future public or private equity, equity-linked (excluding commercial bank debt) offerings for which we retain an underwriter, agent, advisor, finder or other person or entity in connection with such offering.

**Stabilization**

The rules of the SEC generally prohibit the underwriters from trading in our securities on the open market during this offering. However, the underwriters are allowed to engage in some open market transactions and other activities during this offering that may cause the market price of our securities to be above or below that which would otherwise prevail in the open market. These activities may include stabilization, short sales and over-allotments, syndicate covering transactions and penalty bids.

● Stabilizing transactions consist of bids or purchases made by the representative for the purpose of preventing or slowing a decline in the market price of our securities while this offering is in progress.

● Short sales and over-allotments occur when the representative sells more of our shares of common stock than it purchases from us in this offering. To cover the resulting short position, the representative may exercise the over-allotment option described above or may engage in syndicate covering transactions. There is no contractual limit on the size of any syndicate covering transaction. The representative will make available a prospectus in connection with any such short sales. Purchasers of shares sold short by the representative are entitled to the same remedies under the federal securities laws as any other purchaser of shares covered by the registration statement.

● Syndicate covering transactions are bids for or purchases of our securities on the open market by the representative in order to reduce a short position.

● Penalty bids permit the representative to reclaim a selling concession from a syndicate member when the shares of Common Stock originally sold by the syndicate member are purchased in a syndicate covering transaction to cover syndicate short positions.

If the underwriters commence these activities, they may discontinue them at any time without notice. The underwriters will carry out any such transactions on Nasdaq.

**Listing**

Our Common Stock is listed on Nasdaq Capital Market under the symbol "GMBL."

**Electronic Distribution**

A prospectus in electronic format may be made available on websites or through other online services maintained by the underwriters of this offering, or by their affiliates. Other than the prospectus in electronic format, the information on any underwriters' website and any information contained in any other website maintained by an underwriter is not part of this prospectus or the registration statement of which this prospectus forms a part, has not been approved and/or endorsed by us or the representative in its capacity as an underwriter.

**Other Relationships**

The representative and its affiliates have engaged in, and may in the future engage in, investment banking and other commercial dealings in the ordinary course of business with us or our affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions. In the course of its businesses, the representative and its affiliates may actively trade our securities or loans for its own account or for the accounts of customers, and, accordingly, the representative and its affiliates may at any time hold long or short positions in such securities or loans.

Except for services provided in connection with this offering, and except as set forth in this section, the representative has not provided any investment banking or other financial services during the 180-day period preceding the date of this prospectus and we do not expect to retain the representative to perform any investment banking or other financial services for at least 90 days after the date of this prospectus.

On September 15, 2022, we entered into an underwriting agreement with Maxim Group LLC and Joseph Gunnar & Co. LLC as the underwriters, relating to a firm commitment public offering of (a) 30,000,000 shares of our common stock and (b) warrants to purchase up to 30,000,000 shares of common stock. The Company paid the underwriters an aggregate of $526,710 in discounts and commissions in connection with the offering, which closed on September 19, 2022.

**Selling Restrictions**

No action has been taken in any jurisdiction (except in the United States) that would permit a public offering of our Units, or the possession, circulation or distribution of this prospectus or any other material relating to us or our Units in any jurisdiction where action for that purpose is required. Accordingly, our Units may not be offered or sold, directly or indirectly, and this prospectus or any other offering material or advertisements in connection with our securities may be distributed or published, in or from any country or jurisdiction, except in compliance with any applicable rules and regulations of any such country or jurisdiction.

**Notice to Non-U.S. Investors**

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State") an offer to the public of any securities which are the subject of the offering contemplated by this prospectus may not be made in that Relevant Member State except that an offer to the public in that Relevant Member State of any such securities may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:

● to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

● to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts;

● by the underwriter to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive); or

● in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of these securities shall result in a requirement for the publication by the issuer or the underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an "offer to the public" in relation to any of the securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any such securities to be offered so as to enable an investor to decide to purchase any such securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression" Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

The representative has represented, warranted and agreed that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. it
 has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement
 to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000 (the FSMA)) received
 by it in connection with the issue or sale of any of the securities in circumstances in which section 21(1) of the FSMA does not
 apply to the issuer; and

b. it
 has complied with and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the
 securities in, from or otherwise involving the United Kingdom.

**European Economic Area**

In particular, this document does not constitute an approved prospectus in accordance with European Commission's Regulation on Prospectuses no. 809/2004 and no such prospectus is to be prepared and approved in connection with this offering. Accordingly, in relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (being the Directive of the European Parliament and of the Council 2003/71/EC and including any relevant implementing measure in each Relevant Member State) (each, a Relevant Member State), with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the Relevant Implementation Date) an offer of securities to the public may not be made in that Relevant Member State prior to the publication of a prospectus in relation to such securities which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of securities to the public in that Relevant Member State at any time:

● to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

● to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000; and (3) an annual net turnover of more than €50,000,000, as shown in the last annual or consolidated accounts; or

● in any other circumstances which do not require the publication by the Issuer of a prospectus pursuant to Article 3 of the Prospectus Directive.

For the purposes of this provision, the expression an "offer of securities to the public" in relation to any of the securities in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the securities to be offered so as to enable an investor to decide to purchase or subscribe for the securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State. For these purposes the shares offered hereby are "securities."

**Canada**

The securities may be sold in Canada only to purchasers purchasing, or deemed to be purchasing, as principal that are "accredited investors", as defined in National Instrument 45-106 Prospectus Exemptions or subsection 73.3(1) of the Securities Act (Ontario), and are "permitted clients", as defined in National Instrument 31-103 Registration Requirements, Exemptions and Ongoing Registrant Obligations. Any resale of the securities must be made in accordance with an exemption from, or in a transaction not subject to, the prospectus requirements of applicable securities laws. Securities legislation in certain provinces or territories of Canada may provide a purchaser with remedies for rescission or damages if this prospectus (including any amendment thereto) contains a misrepresentation, provided that the remedies for rescission or damages are exercised by the purchaser within the time limit prescribed by the securities legislation of the purchaser's province or territory. The purchaser should refer to any applicable provisions of the securities legislation of the purchaser's province or territory for particulars of these rights or consult with a legal advisor. Pursuant to section 3A.3 of National Instrument 33-105 Underwriting Conflicts (NI 33-105), the underwriters are not required to comply with the disclosure requirements of NI 33-105 regarding underwriter conflicts of interest in connection with this offering.

**DESCRIPTION OF CAPITAL STOCK**

**Capital Stock**

Our authorized capital stock consists of 500,000,000 shares of common stock, with a par value of $0.001 per share, and 10,000,000 shares of blank check preferred stock. As of [●], 2023, there were [●] shares of our common stock issued and outstanding and two classes of blank check preferred stock created. As of [●], 2023, there were 835,950 shares of 10% Series A Cumulative Redeemable Convertible Preferred Stock and 100 shares of Series B Preferred Stock issued and outstanding.

**Common Stock**

Our common stock is entitled to one vote per share on all matters submitted to a vote of the stockholders, including the election of directors. Except as otherwise required by law or provided in any resolution adopted by our Board with respect to any series of preferred stock, the holders of our common stock will possess all voting power. Generally, all matters to be voted on by stockholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all shares of our common stock that are present in person or represented by proxy, subject to any voting rights granted to holders of any preferred stock. The holders of thirty-three and 34/100 percent (33.34%) of the issued and outstanding voting shares at any meeting shall constitute a quorum for the transaction of business at a meeting of the corporation. If there is less than a quorum, the meeting may be adjourned to another time, or place required by law. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our Amended and Restated Articles of Incorporation. Our Amended and Restated Articles of Incorporation do not provide for cumulative voting in the election of directors.

Subject to any preferential rights of any outstanding series of preferred stock created from time to time by our Board, upon liquidation, dissolution or winding up, the holders of shares of our common stock will be entitled to receive pro rata all assets available for distribution to such holders.

In the event of any merger or consolidation with or into another company in connection with which shares of our common stock are converted into or exchangeable for shares of stock, other securities or property (including cash), all holders of our common stock will be entitled to receive the same kind and amount of shares of stock and other securities and property (including cash). Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.

**Dividend Policy**

We have not paid any cash dividends on our common stock and do not currently anticipate paying cash dividends in the foreseeable future. The agreements into which we may enter in the future, including indebtedness, may impose limitations on our ability to pay dividends or make other distributions on our capital stock. Payment of future dividends on our common stock, if any, will be at the discretion of our Board and will depend on, among other things, our results of operations, cash requirements and surplus, financial condition, contractual restrictions and other factors that our Board may deem relevant. We intend to retain future earnings, if any, for reinvestment in the development and expansion of our business.

**Preferred Stock**

Our Board is authorized by our Amended and Restated Articles of Incorporation to divide the authorized shares of our preferred stock into one or more series, each of which must be so designated as to distinguish the shares of each series of preferred stock from the shares of all other series and classes. Our Board is authorized, within any limitations prescribed by law and our Amended and Restated Articles of Incorporation, to fix and determine the designations, rights, qualifications, preferences, limitations and terms of the shares of any series of preferred stock including, but not limited to, the following:

&nbsp;&nbsp;&nbsp;&nbsp;1. The
 number of shares constituting that series and the distinctive designation of that series, which may be by distinguishing number,
 letter or title;

2. The
 dividend rate on the shares of that series, whether dividends will be cumulative, and if so, from which date(s), and the relative
 rights of priority, if any, of payment of dividends on shares of that series;

3. Whether
 that series will have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights;

4. Whether
 that series will have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment
 of the conversion rate in such events as the Board determines;

5. Whether
 or not the shares of that series will be redeemable, and, if so, the terms and conditions of such redemption, including the date
 or date upon or after which they are redeemable, and the amount per share payable in case of redemption, which amount may vary under
 different conditions and at different redemption dates;

6. Whether
 that series will have a sinking fund for the redemption or purchase of shares of that series, and, if so, the terms and amount of
 such sinking fund;

7. The
 rights of the shares of that series in the event of voluntary or involuntary liquidation, dissolution or winding up of the corporation,
 and the relative rights of priority, if any, of payment of shares of that series; and

8. Any
 other relative rights, preferences and limitations of that series.

The Board has designated two classes of Preferred Shares, 10% Series A Cumulative Redeemable Convertible Preferred Stock and Series B Preferred Stock. The following summary of each class is supplemented herein by the detailed descriptions of rights and limitations of each class provided in Exhibits 3.3 and 3.4.

10% Series A Cumulative Redeemable Convertible Preferred Stock:

On November 10, 2021, the Company designated 1,725,000 shares of preferred stock as 10% Series A Cumulative Redeemable Convertible Preferred Stock ("10% Series A Cumulative Redeemable Convertible Preferred Stock"), with a par value of $0.001 per share and liquidation value of $11.00. On November 11, 2021, the Company announced that it priced an underwritten public offering of preferred stock as 10% Series A Cumulative Redeemable Convertible Preferred Stock in the first series issuance of preferred stock, of which 800,000 shares were issued at $10 a share on November 16, 2021.

In addition, under the terms of the underwriting agreement for the public offering of the 10% Series A Cumulative Redeemable Convertible Preferred Stock, the Company granted the underwriters a 45-day option to purchase up to an additional 120,000 shares. On December 10, 2021, there was a partial exercise to purchase 35,950 shares.

Conversion

Each share of 10% Series A Cumulative Redeemable Convertible Preferred Stock is convertible into one share of the Company's Common Stock at a conversion price of $17.50 per common share. Subject to earlier conversion or redemption, the 10% Series A Cumulative Redeemable Convertible Preferred Stock matures five years from issuance, or November 15, 2026, at which point the Company must redeem the shares of 10% Series A Cumulative Redeemable Convertible Preferred Stock in cash.

Dividends

Dividends on the 10% Series A Cumulative Redeemable Convertible Preferred Stock accrue daily and are cumulative from the date of issuance. The dividends on the 10% Series A Cumulative Redeemable Convertible Preferred Stock are payable monthly in arrears on the last day of each calendar month, when, as and if declared by the Company's Board, at the rate of 10.0% per annum. In the event the dividends are not paid in cash, the dividends shall continue to accrue at a dividend rate of 10.0%.

Redemption and Liquidation

The 10% Series A Cumulative Redeemable Convertible Preferred Stock is also redeemable, at the option of the Board, in whole or in part, at any time on or after January 1, 2023. The 10% Series A Cumulative Redeemable Convertible Preferred Stock includes a change of control put option which allows the holders of the 10% Series A Cumulative Redeemable Convertible Preferred Stock to require the Company to repurchase such holders' shares in cash in an amount equal to the initial purchase price plus accrued dividends. The 10% Series A Cumulative Redeemable Convertible Preferred Stock is contingently redeemable upon certain deemed liquidation events, such as a change in control. Because a deemed liquidation event could constitute a redemption event outside of the Company's control, all shares of preferred stock have been presented outside of permanent equity in mezzanine equity on the unaudited condensed consolidated balance sheets.

The 10% Series A Cumulative Redeemable Convertible Preferred Stock is not mandatorily redeemable, but rather is only contingently redeemable, and given that the redemption events are not certain to occur, the shares have not been accounted for as a liability. As the 10% Series A Cumulative Redeemable Convertible Preferred Stock is contingently redeemable on events outside of the control of the Company, all shares of 10% Series A Cumulative Redeemable Convertible Preferred Stock have been presented outside of permanent equity in mezzanine equity on the consolidated balance sheets.

Voting Rights

The holders of the 10% Series A Cumulative Redeemable Convertible Preferred Stock will not have any voting rights, except whenever dividends on any share of any series of preferred stock ("Applicable Preferred Stock") have not been paid in an aggregate amount equal to four monthly dividends on the shares, the holders of the Applicable Preferred Stock will have the exclusive and special right, voting separately as a class and without regard to series, to elect at an annual meeting of stockholders or special meeting held in place of it one member of the Board, until all arrearages in dividends and dividends in full for the current monthly period have been paid

Series B Preferred Stock:

On December 21, 2022, the Company filed a Certificate of Designation (the "Series B COD") with the Secretary of State of Nevada, effective as of the time of filing, designating the rights, preferences, privileges and restrictions of the shares of Series B Preferred Stock. The Certificate of Designation provides that one hundred (100) shares of Preferred Stock will have 25,000,000 votes each and will vote together with the outstanding shares of the Company's common stock as a single class exclusively with respect to any proposal to effect a reverse stock split of the Company's common stock. The Series B Preferred Stock will be voted, without action by the holder, on any such proposal in the same proportion as shares of common stock are voted. The Series B Preferred Stock otherwise has no voting rights except as otherwise required by the Nevada Revised Statutes.

Designation, Amount and Par Value.

Conversion.

The Series B Preferred Stock are not convertible.

<u>Dividends</u>

The holder of Series B Preferred Stock, as such, is not entitled to receive dividends or distributions of any kind.

Voting Rights

Except as otherwise provided by the Company's Amended and Restated Articles of Incorporation or required by law, the holder of Series B Preferred Stock has no voting rights, except that the holder of Series B Preferred Stock has the right to vote on any resolution or proposal presented to the stockholders of the Company to approve a decrease in the number of the Company's issued and outstanding shares of Common Stock, or reverse stock split of such issued and outstanding shares, within a range as determined by the Board in accordance with the terms of such amendment (the "Reverse Stock Split Proposal"). The outstanding shares of Series B Preferred Stock shall have 25,000,000 votes per share. The outstanding shares of Series B Preferred Stock shall vote together with the outstanding shares of Common Stock, par value $0.001 per share of Common Stock of the Company as a single class exclusively with respect to the Reverse Stock Split Proposal and are not entitled to vote on any other matter except to the extent required under the Nevada Revised Statutes.

The shares of Series B Preferred Stock are voted, without action by the holder, on the Reverse Stock Split Proposal in the same proportion as shares of Common Stock are voted (excluding any shares of Common Stock that are not voted), or otherwise, or which are counted as abstentions or broker non-votes) on the Reverse Stock Split Proposal (and, for purposes of clarity, such voting rights shall not apply on any other resolution presented to the stockholders of the Company).

Liquidation.

The Series B Preferred Stock shall have no rights as to any distribution of assets of the Company for any reason, including upon a liquidation, bankruptcy, reorganization, merger, acquisition, sale, dissolution or winding up of the Company, whether voluntarily or involuntarily, and shall not affect the liquidation or distribution rights of holders of any other outstanding series of preferred stock of the Company, if any.

Redemption.

The outstanding shares of Series B Preferred Stock will be redeemed in whole, but not in part, at any time (i) if such redemption is ordered by the Board in its sole discretion, automatically and effective on such time and date specified by the Board in its sole discretion, or (ii) automatically upon the stockholder approval of the Reverse Stock Split Proposal. As used herein, the "Redemption Time" shall mean the effective time of the redemption.

Each share of Series B Preferred Stock redeemed in the redemption will be redeemed in consideration for the right to receive an amount equal to $10 in cash (the "Redemption Price") for each share of Series B Preferred Stock that is owned of record as of immediately prior to the applicable effective time of the redemption and redeemed pursuant to the Redemption, payable upon the applicable effective time of the redemption.

From and after the time at which the shares of Series B Preferred Stock are called for redemption (whether automatically or otherwise) in accordance with the above, such shares of Series B Preferred Stock will cease to be outstanding, and the only right of the former holder of such shares of Series B Preferred Stock, as such, will be to receive the applicable Redemption Price. The shares of Series B Preferred Stock redeemed by the Company will be automatically retired and restored to the status of authorized but unissued shares of preferred stock, upon such redemption. Notice of a meeting of the Company's stockholders for the submission to such stockholders of any proposal to approve the Reverse Stock Split constitutes notice of the redemption of shares of Series B Preferred Stock and results in the automatic redemption of the shares of Series B Preferred Stock at the effective time of the redemption pursuant to the above. In connection with the issuance of the Series B Preferred Stock, the Company has set apart funds for payment for the redemption of the shares of Series B Preferred Stock and will continue to keep such funds apart for such payment through the payment of the purchase price for the Redemption of such shares.

**Provisions in Our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws That Would Delay, Defer or Prevent a Change in Control**

Our Amended and Restated Articles of Incorporation authorize our Board to issue a class of preferred stock commonly known as a "blank check" preferred stock. Specifically, the preferred stock may be issued from time to time by the Board as shares of one (1) or more classes or series. Our Board, subject to the provisions of our Amended and Restated Articles of Incorporation and limitations imposed by law, is authorized to adopt resolutions; to issue the shares; to fix the number of shares; to change the number of shares constituting any series; and to provide for or change the following: the voting powers; designations; preferences; and relative, participating, optional or other special rights, qualifications, limitations or restrictions, including the following: dividend rights, including whether dividends are cumulative; dividend rates; terms of redemption, including sinking fund provisions; redemption prices; conversion rights and liquidation preferences of the shares constituting any class or series of the preferred stock.

In each such case, we will not need any further action or vote by our stockholders. One of the effects of undesignated preferred stock may be to enable the Board to render more difficult or to discourage an attempt to obtain control of us by means of a tender offer, proxy contest, merger or otherwise, and thereby to protect the continuity of our management. The issuance of shares of preferred stock pursuant to the Board's authority described above may adversely affect the rights of holders of common stock. For example, preferred stock issued by us may rank prior to the common stock as to dividend rights, liquidation preference or both, may have full, extended, or limited voting rights or be entitled to vote far in excess of the number of shares of preferred otherwise issued (as in the class of Class B Preferred. The preferred might also be convertible into shares of common stock. Accordingly, the issuance of shares of preferred stock may discourage bids for the common stock at a premium, affect the quorum or approval of measures put to stockholders, or may otherwise adversely affect the market price of the common stock.

**Common Stock Warrants**

As of December 31, 2022, we have 70,767,558 Common Stock Warrants issued and outstanding entitling the holders to purchase 70,767,558 shares of our Common Stock at prices ranging from $0.937 to $17.50.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Outstanding as of December 31, 2022** |  | **Exercise Price** | **Expiration** | **Material Terms** |
| December 22, 2022 Common Stock Warrants | 14567000 | (1) | $0.937 | December 21, 2027 | All but $0.001 of the exercise price per warrant was prepaid to the Company at the closing of the offering |
| September 19, 2022 Common Stock Warrants | 33600000 |  | $0.25 | September 19, 2027 | Redeemable for cash in the event of a fundamental transaction |
| March 2, 2022 Common Stock Warrants | 17250000 |  | $1.00 | March 2, 2027 | Redeemable for cash in the event of a fundamental transaction |
| June 2, 2021 Series A Warrants | 2000000 |  | $17.50 | June 2, 2025 | Redeemable for cash in the event of a fundamental transaction |
| June 2, 2021 Series B Warrants | 2000000 |  | $17.50 | June 2, 2023 | Redeemable for cash in the event of a fundamental transaction |
| Unit A Warrants | 1136763 |  | $4.25 | April 14, 2025 |  |
| Unit A Conversion Warrants | 40582 |  | $4.25 | April 14, 2025 |  |
| Placement Agent Warrants | 173213 |  | $5.31 | December 12, 2023 | Redeemable for cash in the event of a fundamental transaction |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) As
 of December 31, 2022, the Holder has exercised 3,283,000 of the 17,850,000 Pre-funded Warrants purchased.

**Nevada Anti-Takeover Laws**

Nevada Revised Statutes sections 78.378 to 78.379 provide state regulation over the acquisition of a controlling interest in certain Nevada corporations unless the articles of incorporation or bylaws of the corporation provide that the provisions of these sections do not apply. Our Amended and Restated Articles of Incorporation and Amended and Restated Bylaws do not state that these provisions do not apply. The statute creates a number of restrictions on the ability of a person or entity to acquire control of a Nevada company by setting down certain rules of conduct and voting restrictions in any acquisition attempt, among other things. The statute is limited to corporations that are organized in the state of Nevada and that have 200 or more stockholders, at least 100 of whom are stockholders of record and residents of the State of Nevada; and does business in the State of Nevada directly or through an affiliated corporation. Because of these conditions, the statute currently does not apply to our company.

**DESCRIPTION OF SECURITIES WE ARE OFFERING**

We are offering an aggregate of [●] shares of our common stock.

**Common Stock**

The material terms and provisions of our common stock and each other class of our securities which qualifies or limits our common stock are described under the caption "Description of Capital Stock" in this prospectus.

**DESCRIPTION OF BUSINESS**

**Overview**

Esports is a corporation formed in the state of Nevada on July 22, 2008. Esports is a skill-based, competitive, and organized form of video gaming by professional players, playing individually or as teams. Esports typically takes the form of organized, multiplayer video games that include genres such as real-time strategy, fighting, first-person shooter and multiplayer online battle arena games. Most major professional esports events and a wide range of amateur esports events are broadcast live via streaming services including twitch.tv and youtube.com. The Company is developing a wagering platform where players and fans alike may engage in peer-to-peer skill-based betting, and gamers can bet on their ability to beat other gamers in a betting exchange environment and fans and spectators have the ability to bet on their favorite gamers to win real cash and prizes.

EEG is an esports-focused iGaming and entertainment company with a global footprint. EEG's strategy is to build and acquire betting and related platforms and lever them into the rapidly growing esports vertical. We operate the business in two verticals, EEG iGaming and EEG Games.

**Recent Developments:**

***Leadership changes***

*Appointment of Michael Villani as Chief Financial Officer*

Effective January 6, 2023, the Company announced the appointment of Michael Villani as the Interim CFO, in addition to his current role as the Financial Controller. Mr. Villani will also serve as the Company's Principal Financial Officer.

*Resignation of Damian Mathews as Chief Operating Officer and Chief Financial Officer*

On December 31, 2022, Damian Mathews resigned from his position as COO and CFO of the Company. Mr. Mathews did not resign as a result of any disagreement with the Company on any matter relating to the Company's operations, policies or practices. Mr. Mathews will continue on in his role as a Director of the Company.

*Appointment of Alex Igelman as Chief Executive Officer*

On December 22, 2022, the Board of the Company appointed Alex Igelman as CEO, effective January 3, 2023.

*Termination of Grant Johnson as Chairman and Chief Executive Officer*

On December 23, 2022, Grant Johnson resigned from the Board. Mr. Johnson resigned following his termination for cause, by the Board, from his position as Chairman and CEO of the Company, effective December 3, 2022. As a result, Mr. Johnson is no longer an officer or director of the Company.

See the section titled, "Management" and "Executive Compensation," for more information about Mr. Igelman and Mr. Villani.

***Registered Direct Offering***

On December 21, 2022, the Company entered into a securities purchase agreement with an institutional investor. The SPA related to an offering of (a) 7,065,000 shares of our common stock, $0.001 par value per share, for a price of $0.0937 per share, directly to the investor and (b) Pre-funded Warrants to purchase 17,850,000 shares of our common stock at a price of $0.0937 per warrant, directly to such investor, with all but $0.001 per warrant prepaid to the Company at the closing of the offering. The exercise price of each Pre-funded Warrant is $0.001 per share of common stock. The closing of the offering was completed on December 21, 2022.

The Pre-funded Warrants may not be exercised to the extent they cause the purchaser of the Pre-funded Warrants to become a "beneficial owner" of more than 4.99% of our Common Stock for purposes of Section 13(d) of the Securities Exchange Act of 1934. The Beneficial Ownership Limitation may be increased at the discretion of the purchaser of the Pre-funded Warrants to any percentage less than or equal to 9.99% of our common stock upon 61 calendar days' notice or decreased at any time.

The net proceeds from the issuance and sale of the shares of common stock and Pre-funded Warrants, excluding the exercise of the Pre-funded Warrants, was approximately $2,146,686, after deducting the estimated offering expenses payable by us. At the closing of the offering, we remitted to the investor an amount equal to fifty percent (50%) of all the net proceeds from the sale of our common stock and Pre-funded Warrants, or approximately $1,073,343. The amounts remitted to the investor were applied to accrued interest and future interest payments through February 28, 2023 under the Senior Convertible Note. We will have broad discretion in the use of the remaining net proceeds upon satisfying our obligation to the holder of the Senior Convertible Note and payment of offering expenses, including for working capital and general corporate purposes to support ongoing business operations.

The shares of common stock and Pre-funded Warrants sold by us were registered pursuant to a registration statement on Form S-3 (File No. 333-252370), which the Securities and Exchange Commission (the "Commission") declared effective on February 5, 2021. A prospectus supplement and accompanying base prospectus relating to the offering were filed with the Commission on December 21, 2022.

The SPA contained customary representations and warranties and certain indemnification rights and obligations of the parties.

***Series B Preferred Stock***

On December 20, 2022, the Company entered into a Subscription and Investment Representation Agreement with a member of management of the Company, who is an accredited investor (the "Purchaser"), pursuant to which the Company agreed to issue and sell one hundred (100) shares of the Company's Series B Preferred Stock, to the Purchaser for $10 per share in cash. The sale closed on December 21, 2022.

On December 21, 2022, the Company filed a Certificate of Designation with the Secretary of State of Nevada, effective as of the time of filing, designating the rights, preferences, privileges and restrictions of the shares of Series B Preferred Stock. The Certificate of Designation provides that one hundred (100) shares of Series B Preferred Stock will have 25,000,000 votes each and will vote together with the outstanding shares of the Company's common stock as a single class exclusively with respect to any proposal to effect a reverse stock split of the Company's common stock. The Preferred Stock will be voted, without action by the holder, on any such proposal in the same proportion as shares of common stock are voted. The Series B Preferred Stock otherwise has no voting rights except as otherwise required by the Nevada Revised Statutes.

The Series B Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the Company. The Series B Preferred Stock has no rights with respect to any distribution of assets of the Company, including upon a liquidation, bankruptcy, reorganization, merger, acquisition, sale, dissolution or winding up of the Company, whether voluntarily or involuntarily. The holder of the Series B Preferred Stock will not be entitled to receive dividends of any kind.

The outstanding shares of Series B Preferred Stock shall be redeemed in whole, but not in part, at any time (i) if such redemption is ordered by the Board in its sole discretion or (ii) automatically upon the effectiveness of stockholder approval of the reverse stock split. Upon such redemption, the holder of the Series B Preferred Stock will receive consideration of $10 per share in cash.

***Sale and Restructuring in the iGaming Business***

We have initiated a process to evaluate the strategic options for the iGaming business, including exploring a sale of iGaming assets due to increasing regulatory burdens and competition. Our new CEO will be tasked with assessing the value of the iGaming assets and determining next steps. The Company has also taken the following actions:

***Closure of Argyll and vie.gg***

On November 10, 2022, the Company determined that it would close down its licensed remote gambling operation in the UK market. The Company will surrender its UK license as part of the winding down of the Argyll UK iGaming operations. On November 15, 2022, as part of the winding down of the Argyll UK iGaming operations, players were informed that they would no longer be able to place bets from November 30, 2022 and that they could withdraw their balances through December 7, 2022. On December 8, 2022 Argyll UK surrendered its UK license and the surrender was confirmed by the UKGC on December 9, 2022. Between December 7, 2022 and December 14, 2022 Argyll UK attempted to refund customer accounts that still had remaining balances. As of December 31, 2022, approximately $200,000 still remained to be refunded to customers. Going forward, Argyll UK will comply with requests for refunds to the extent required by law and in accordance with Argyll UK's terms and conditions. The Company had previously fully impaired the goodwill, intangible assets and other long-lived assets of the Argyll UK in the fiscal year ended June 30, 2022.

On October 28, 2022, the Company determined that it would close down its vie.gg New Jersey operations and exit its transactional waiver from the New Jersey Division of Gaming Enforcement.

***Sale of Spanish iGaming Operations***

On November 22, 2022, the Company signed a letter of intent to sell its Spanish iGaming operations, including its Spanish iGaming license. The Company expects to close the transaction in January 2023 and expects to receive approximately $1,000,000 in proceeds and 1,000,000 in cash from the return of a deposit held with the Spanish regulator. Sixty-five percent (65%) of the proceeds and cash received are required to be remitted to the Holder of the Senior Convertible Note. The estimated gain on sale is expected to be approximately $1,000,000. The sale of the Spanish license is subject to various closing conditions and we cannot assure that they will be satisfied. If the sale is not consummated, our liquidity position will be adversely impacted and this could further adversely impact our financial condition and results of operations.

***Senior Convertible Note***

On February 22, 2022, the Company exchanged the Old Senior Convertible Note with a remaining principal of $29,150,001, with the Senior Convertible Note in the aggregate principal of $35,000,000. As part of the Company's September 19, 2022 offering of shares of common stock and warrants to purchase common stock, the Company remitted to the Holder an amount of $2,778,427 from the proceeds reducing the Senior Convertible Note principal balance to $32,221,573 as recorded in the unaudited condensed consolidated balance sheet as of September 30, 2022. Subsequent to September 30, 2022, as part of the December 2022 Registered Direct Offering the Company paid the Holder $1,073,343 for interest due and interest prepaid through February 28, 2023. The Company has not maintained compliance with certain debt covenants and is currently in default under the terms of the Senior Convertible Note. The Company is in discussions with the Holder to restructure its payment obligations, including but not limited to eliminating the derivative liability on its consolidated balance sheet and addressing the Company's default status under the debt. In connection with the Company's plan to maintain compliance with the Nasdaq Listing Rules, which includes actions to be taken to meet the minimum market value of listed securities or minimum stockholders' equity, the Company and the Holder of the Senior Convertible Note intend to exchange, pursuant to an available exemption under the Securities Act, no less than $7,000,000 of the Senior Convertible Note, and no less than $2,500,000 in accrued interest and other penalties incurred under the Senior Convertible Note, to new perpetual convertible preferred stock no later than February 20, 2023. The Company may issue up to a maximum of $34,700,000 of perpetual convertible preferred stock by June 30, 2023, which is equivalent to the principal balance due under the Senior Convertible Note of $32,221,573 and the balance of accrued interest and other penalties due to the Holder of approximately $2,500,000, in order to maintain long-term compliance with Nasdaq Listing Rules. Although the Company and the Holder of the Senior Convertible Note are in active discussions to determine the terms of the perpetual convertible preferred stock, as of the date of this prospectus, such terms have not been finalized and there is no assurance that the Company and the Holder will come to an agreement on such terms. The ability of the Holder of the perpetual convertible preferred stock to convert such preferred stock into shares of our common stock is subject to stockholder approval at our upcoming 2023 annual meeting of stockholders. The Company will disclose the material terms of the perpetual convertible preferred stock in connection with the completion of the exchange transaction, including the filing of a certificate of designation with the State of Nevada to designate the terms of such preferred stock. In addition, as part of our plan to maintain compliance with the Nasdaq Listing Rules, subject to stockholder approval at such annual meeting, we intend to effect a reverse stock split of our outstanding common stock, with our Board having the discretion as to the exact ratio of any reverse stock split, without a corresponding reduction in the total number of authorized shares of common stock.

***Compliance with Nasdaq Listing Requirements***

On April 11, 2022, the Company received a deficiency notification letter from the Listing Qualifications Staff of Nasdaq indicating that the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2) because the bid price for the Company's Common Stock had closed below $1.00 per share for the previous thirty consecutive business days.

On June 7, 2022, the Company received a further letter from Nasdaq notifying the Company that for the last 30 consecutive business days, the Company's minimum MVLS was below the minimum of $35,000,000 required for continued listing on Nasdaq pursuant to Nasdaq Listing Rule 5550(b)(2).

On October 11, 2022, the Company received a third letter from Nasdaq notifying the Company that the Company's Common Stock will be delisted, and the Company's Common Stock warrants traded under the symbols GMBLW and GMBLZ and the Company's 10% Series A cumulative redeemable convertible preferred stock traded under symbol GMBLP will no longer qualify for listing, and in that regard trading of the Company's Common Stock, Common Stock warrants and 10% Series A cumulative redeemable convertible preferred stock will be suspended. The Company requested an appeal with the Nasdaq Hearings Panel (the "Panel") and the hearing was held on November 17, 2022.

On November 30, 2022, the Company received a determination from the Panel granting the Company's request for the continued listing of its common stock on the Capital Market tier of Nasdaq, subject to the Company evidencing compliance with Nasdaq's minimum bid price, and the $2,500,000 stockholders' equity requirement, as set forth in Nasdaq Listing Rules 5550(a)(2) and 5550(b)(1), respectively, on or before February 7, 2023 and March 31, 2023, respectively, and adhering to certain other conditions and requirements.

On December 6, 2022, the Company received a fourth letter from Nasdaq notifying the Company that it has not regained compliance with Listing Rule 5550(b)(2) requiring the Company to maintain a MVLS at a minimum of $35,000,000. This was addressed in the November 17, 2022, hearing before the Panel where the Company presented on its plan to comply with the Rule 5550(b)(2) or alternative criteria and was granted continued listing subject to the criteria noted above.

The list of conditions provided by the Panel is as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. On
 or before January 13, 2023, the Company shall file a Form S-1 registration statement with the SEC for a $10 million public offering;

2. On
 January 26, 2023, the Company shall obtain stockholder approval for a reverse stock split at a ratio that is sufficient to ensure
 compliance with the Bid Price Rule;

3. On
 February 7, 2023, the Company shall have demonstrated compliance with the Bid Price Rule, by evidencing a closing bid price of $1
 or more per share for a minimum of ten consecutive trading sessions;

4. On
 February 20, 2023, the Company shall provide a written update to the Panel regarding the progress of its debt-to-equity conversion
 plan and its impact on the Company's equity; and

5. On
 March 31, 2023, the Company shall demonstrate compliance with the stockholder equity requirement, as outlined in Equity Rule.

Additionally, the Panel reserved the right to reconsider the terms of this exception. As a result, any failure to regain and maintain compliance with the continued listing requirements of Nasdaq could result in delisting of our common stock from Nasdaq and negatively impact our company and holders of our common stock, including by reducing the willingness of investors to hold our common stock because of the resulting decreased price, liquidity and trading of our common stock, limited availability of price quotations and reduced news and analyst coverage. Delisting may adversely impact the perception of our financial condition, cause reputational harm with investors, our employees and parties conducting business with us and limit our access to debt and equity financing.

As discussed above, the Company is in the process of taking definitive steps to comply with all applicable conditions and criteria for continued listing on Nasdaq. There can be no assurances, however, that the Company will be able to do so. The Company must satisfy the time frame granted by the Panel or Nasdaq will provide written notification that its securities will be delisted. As part of the compliance plan the Company is negotiating with the Holder of its Senior Convertible Note to restructure the Senior Convertible Note, including the derivative liability.

***Regulatory Developments***

We operate in both emerging and well-established competitive markets. We expect that our future growth will come from online gaming and sports betting via expansions of gaming in existing jurisdictions; entrance into new jurisdictions and, improvements and expansions of our existing properties and strategic acquisitions of gaming properties, expanded software sales to more screens in game centers including in universities, entertainment centers and casinos, as well as increased esports adoption and events, particularly in North America. We continue to adjust operations and cost structures to reflect the changing economic conditions. We also continue to focus on revenue and cost synergies from our acquisitions, and offering our customers additional gaming experiences through our affiliates. The gaming industry is characterized by an increasingly high degree of competition among a large number of participants, including game centers; riverboat casinos; dockside casinos; land-based casinos; video lottery; iGaming; online and retail sports betting; sports media companies; gaming at taverns; gaming at truck stop establishments; sweepstakes and poker machines not located in casinos; the potential for increased fantasy sports; significant growth of Native American gaming tribes, historic racing or state-sponsored i-lottery products in or adjacent to states we operate in; and other forms of gaming.

*United Kingdom*

Since the acquisition of the Argyll UK EEG iGaming business on July 31, 2020, the Company has responded to periodic requests for information from the UKGC in relation to information required to maintain its UK license following the change of corporate control. There have been no adverse judgments imposed by the UKGC against the Company. In recent months, the Company reduced its spending on marketing and was focused on retaining existing customers and reactivating past customers. On November 10, 2022, the Company determined that it would close down its licensed remote gambling operation in the UK market. On November 15, 2022, as part of the winding down of the Argyll UK iGaming operations, players were informed that they would no longer be able to place bets from November 30, 2022 and that they could withdraw their balances through December 7, 2022. On December 8, 2022 Argyll UK surrendered its UK license and the surrender was confirmed by the UKGC on December 9, 2022. Between December 7, 2022 and December 14, 2022 Argyll UK attempted to refund customer accounts that still had remaining balances. As of December 31, 2022, approximately $200,000 still remained to be refunded to customers. Going forward, Argyll UK will comply with requests for refunds to the extent required by law and in accordance with Argyll UK's terms and conditions.

*Netherlands*

A new licensing regime was implemented in the Netherlands for online gaming operators, with applications being accepted from April 1, 2021. EEG did not apply for a license after assessing the criteria for applying. The first licenses took effect on October 1, 2021. In a surprise to the market, the Dutch Minister for Legal Protection issued guidance warning that even those operators that were not targeting the Dutch market but were passively accepting Dutch customers would be punished, with authorities given the power to issue increased fines. Prior to this guidance, operators had understood that passive acceptance of bets was permissible. The vast majority of unlicensed operators (including EEG's brands) promptly withdrew from the Dutch market completely on October 1, 2021, closing all active Dutch customer accounts. The sudden and earlier than anticipated withdrawal from the Dutch market had a negative impact on the unlicensed operators in the region. The sole period in which the Company had revenues from its EEG iGaming operations in the Netherlands was in the fiscal quarter ended September 30, 2021.

*Finland*

On January 1, 2022, amendments to the Finnish Lotteries Act came into effect, further restricting marketing opportunities and enhancing the enforcement powers of the Finnish regulator. Prior to these amendments coming into effect, in the fiscal quarter ended December 31, 2021, the Company has received communications from the Finnish regulator requesting clarification on its marketing and gaming practices related to its Finnish EEG iGaming operations. The Company responded to the initial communication in third quarter of fiscal year 2022 and received a second request for further clarification. On November 28, 2022, the Company provided its response, further addressing its business and marketing operations in Finland.

Further powers allowing the Finnish regulator to require blocking by payment service providers of overseas operators who are targeting their marketing activities towards Finnish customers are also due to come into effect in 2023. Operations in Finland run under the MGA license on the Lucky Dino in-house built iDefix casino-platform.

On January 5, 2023, the Company received a communication that the Finnish regulator was satisfied with the Company's response and no adverse judgments were imposed by the Finnish regulator against the Company.

**EEG iGaming:**

EEG iGaming includes the esports betting platform with full casino and sportsbook functionality and services for iGaming customers. iDefix, proprietary technology acquired in connection with the acquisition of Lucky Dino, is an MGA licensed iGaming platform with payments, payment automation manager, bonusing, loyalty, compliance and casino integrations that services all Lucky Dino sites along with SportNation.com and Vie.bet. In addition, our other in-house gambling software platform, Phoenix, is a modern reimagined sportsbook that caters to both millennial esports bettors as well as traditional sports bettors. Phoenix is being developed through the assets and resources from our acquisition of FLIP.

EEG's goal is to be a leader in the large and rapidly growing sector of esports real-money wagering, offering fans the ability to wager on professional esports events in a licensed and secure environment. From February 2021, under the terms of our MGA license, we are now able to accept wagers from residents of over 180 jurisdictions including countries within the European Union, New Zealand and Latin America, on our ''Vie.bet'' platform.

Alongside the Vie.bet esports focused platform, EEG owns and operates:

● Lucky
 Dino, which is licensed by the MGA to offer five online casino and sportsbooks under its seven different brands on
 its in-house built iDefix casino-platform, and

● Bethard
 online sportsbook and casino brands, operating under MGA, Spanish, Irish and Swedish licenses.

We currently hold four Tier-1 gambling licenses (Malta, Ireland, Spain and Sweden). Our Lucky Dino and Bethard operations provide a foothold in mature markets in Europe into which we believe we can cross-sell our esports offerings.

**EEG Games:**

EEG Games' focus is on providing esports entertainment experiences to gamers through a combination of: (1) our proprietary infrastructure software, GGC, which underpins our focus on esports and is a leading provider of LAN center management software and services, enabling us to seamlessly manage mission critical functions such as game licensing and payments, (2) online tournaments (through our EGL tournament platform), and (3) player-vs-player wagering. Currently, we operate our esports EEG Games business in the United States and Europe.

We believe that as the size of the market and the number of esports enthusiasts continues to grow, so will the number of esports enthusiasts who gamble on events, which we believe will increase the demand for our platform.

***Competitive Advantages/Operational Strengths***

The online gambling and wagering industry is increasingly competitive. With relatively low barriers to entry, new competitors are entering the esports wagering and video game tournament segments. In both of these segments, there currently exist several major competitors. Most of EEG's current competitors, including bet365, William Hill, Betway, Penn Entertainment, Inc. (NASDAQ:PENN), Pinnacle Sports, PointsBet Holdings Limited (OTC:PBTHF), DraftKings Inc. (NASDAQ:DKNG), Rush Street Interactive, Inc. (NYSE:RSI), Kindred Group plc, Flutter Entertainment plc, Betsson AB, Super Group (SGHC) Limited (NYSE:SGHC), 888 Holdings plc, and Entain Plc, have far greater resources than us.

However, we believe the following strengths position us for sustainable growth:

***Management Team and Key Personnel Experience***:

EEG's Board includes senior managers with extensive experience in online gambling, esports, information technology, compliance, regulation, accounting and finance.

EEG's officers and management, including our recently hired CEO, include individuals with extensive experience in online gambling, esports, information technology, marketing, business development, payment processing, compliance, regulation, accounting, finance and customer service.

***Unique Positioning within online gaming:***

EEG was one of the first online gaming companies with an esports-first focus and a line of esports businesses; leading the effort to broaden legislation for betting on esports competitions. We are uniquely focused on connecting to customers across a broad set of retail and digital businesses to achieve greater revenue, scale, and profitability, as well as shaping esports infrastructure to facilitate omni-channel betting.

***Technology Assets:***

● EEG has acquired businesses with state-of-the-art business-to-business/business-to-consumer technologies across esports competition infrastructure, for in-person and internet-based competitions, for tournaments, esports wagering and skill-based betting.

● GGC Proprietary Platform: GGC's ggLeap cloud-based management software solution enables Gaming Centers to run games through the stat integrated client, reward gamers for playing the games they love, and allow gamers to run their own local tournaments. GGC is currently used by over 600 LAN centers and connects with over 2 million gamers monthly.

● Lucky Dino's online casino platform – iDefix, a modern online casino platform licensed in Malta, upon which the Lucky Dino's online casino brands operate. iDefix provides a full technical solution for casino operations, with various management tools as well as in-depth business intelligence reporting and analysis. The technology is built on a scalable event-driven micro-services-based architecture offering advanced automation features including anti-money laundering compliance and know your customer ("KYC") handling, responsible gambling management and monitoring, fraud and bonus abuse detection, as well as gamification, customer relationship management and bonus management.

**Growth Strategy**

In the future, we intend to:

● Expand our esports services into more of the 45 states where skill-based gambling is legal, enhance our product offering, as well as create relationships with players that will migrate into our Vie.gg real-money wagering platform.

● Expand our esports wagering services into more jurisdictions, utilizing the MGA gaming license, which provides opportunity for access into over 180 countries.

***Future Products and Services:***

**Online Esports Tournament Play**

EEG intends to offer players from around the world, including the United States (unless prohibited in a state or international jurisdiction) the ability to enter and participate in online video game tournaments and win cash prizes, via our enhanced EGL tournament platform. Online esports tournament play consists of two or more people playing against each other in a game from their personal phones or computers, where such players do not necessarily have to be playing in real time. These events could be held over the course of a day, a week or even a month and the winner will be the one with the top score or the fastest time at the conclusion of the event. Cash-based tournaments involving games of skill are not considered gambling in most U.S. states because the generally accepted definition of gambling involves three specific things: (1) the award of a prize, (2) paid-in consideration (meaning entrants pay to compete), and (3) an outcome determined on the basis of chance. As a result, games of skill are not generally subject to the same laws and regulations as our esports event wagering service. We expect participants in our tournaments being able to enter and play against each other with prize money distributed to the last remaining competitors. We anticipate collecting a tournament entry fee for our tournaments, as well as a percentage of total winnings that are paid to users (typically 10% of the entry fees) and thus none of their money will be at risk or otherwise dependent on the outcome. We intend to offer users a wide selection of video games of skill to be played online for real money in groups, both large and small, or major tournaments. We believe using the tournament platform to penetrate the U.S. market will allow us to grow our brand within the esports community.

**International Market Expansion**

EEG received a gaming service license for online betting from the MGA in April 2020, and in February 2021, established a brick-and-mortar office and commenced online gaming operations in Malta. The Bethard brand acquisition added additional Swedish, Irish and Spanish licenses. In order to effectively penetrate international markets, we translated our website into several additional languages and offer customer service and technical support in the local language of key markets.

**EEG's Online Wagering Platforms**

According to Zion Market Research's, the online gambling market represents one of the fastest growing segments of the gambling industry. Zion Market Research estimated the size of the global online gambling market in 2021 was in excess of $61.5 billion and is projected to reach $114.4 billion by 2028.

iDefix, the Company's modern online casino platform that the Lucky Dino online casino brands operate on is licensed platform in Malta. iDefix provides a full technical solution for casino operations, with various management tools as well as in-depth business intelligence reporting and analysis. The Bethard brands operate on SB Tech and offer online users traditional casino style games such as roulette, blackjack, or slots, as well as offering online wagering on traditional sporting events such as soccer, horse racing and football.

On the Vie.gg esports-focused wagering platform, a player can place a bet on a team participating in any number of approved tournaments, which are scheduled to be held in the upcoming weeks. The website also maintains a "how to play" section on the website which provides players with instructional videos on placing bets as well as other pieces of information that may be beneficial to an inexperienced player or a new user of our website. Additionally, the website includes a "frequently asked questions" section which provides customers with the ability to easily navigate general questions relating to the website, personal account information, payment processing and betting rules and procedures.

**Marketing and Sales Initiatives**

The Company has several sponsorship marketing agreements in place for its website.

EEG is looking to expand into new geographic territories by obtaining licenses to operate in those territories. The need for hands-on implementation in these territories and support will require investment in additional marketing activities, offices, and other overhead.

We will also accelerate our expansion if we find complementary businesses that we are able to acquire in other markets. Marketing efforts to expand into new territories have included esports team and tournament sponsorship, affiliate marketing, social media advertising, content creation, and attendance at esports and gaming events in addition to personal contact with other industry leaders.

We plan to increase our marketing efforts and awareness of our brands through our existing suite of websites, as well as future offerings by:

● Educating sports betting consumers and gamers to bet on esports;

● Sponsoring professional esports teams and tournaments that have a global reach;

● Working with sports and gaming celebrities and social media influencers who have an interest in video games and esports to generate new customers and increasing our efforts in attracting esports players and other celebrities who have an interest in video games and esports;

● Using a multichannel approach focused on acquiring and retaining customers; and

● Utilizing multiple social media platforms to promote our wagering business including, but not limited to, Facebook Twitter, Instagram, Snapchat, TikTok, Youtube, Twitch, Discord, Whatsapp, QQ, WeChat, email and SMS messages and using online advertisements, paid search optimization, and various social media campaigns to increase our online presence and drive traffic to our website.

Further, we intend to continue to invest in optimizing the Company's website in an effort to become the premier esports gaming and gambling website in the industry.

**Regulations Affecting our Business**

The offering and operation of online real-money gambling platforms and related software and solutions is subject to extensive regulation and approval by various national, federal, state, provincial, tribal and foreign agencies (collectively, "gaming authorities"). Gambling laws are usually based on public policy declaration designed to protect the integrity of the gaming industry and its consumers, as well as to enhance economic development and tourism and to increase tax revenue. To accomplish these goals, gambling laws require EEG to obtain licenses or findings of suitability from gaming authorities for EEG, including each of our subsidiaries engaged in these activities, and certain of our directors, officers, employees and in some instances, significant stockholders (typically beneficial owners of more than 5% of a company's outstanding equity unless waived as a passive institutional investor). The criteria used by gambling authorities to make determinations as to qualification and suitability of an applicant varies among jurisdictions, but generally require the submission of detailed personal and financial information followed by a thorough and sometimes lengthy investigation. Gaming authorities have broad discretion in determining whether an applicant qualifies for licensing or should be found suitable. Gambling authorities generally look, at a minimum, to the following criteria when determining to grant a license or finding of suitability, including: (i) the financial stability, integrity and responsibility of the applicant, (ii) the quality, security and regulatory compliance of the applicant's online real-money platform and gaming equipment and related software, as applicable and (iii) the history and associations of the applicant. Gambling authorities may, subject to certain administrative proceeding requirements (i) deny an application, or limit, condition, restrict, revoke or suspend any license, registration, finding of suitability or approval and (ii) fine any person licensed, registered or found suitable or approved. Notwithstanding the foregoing, some jurisdictions explicitly prohibit gaming in all or certain forms, and we will not market our gambling services in these jurisdictions. If any director, officer or employee of EEG fails to qualify for a license or is found unsuitable (including due to the failure to submit the required documentation) by a gaming authority, EEG may deem it necessary, or be required to, sever its relationship with such person, which may include terminating the employment of any such person. Gambling authorities have the right to investigate any individual or entity having a material relationship with EEG, to determine whether such individual or entity is suitable or should be licensed to do business as a business associate of ours. In addition, certain gambling authorities monitor the activities of the entities they regulate both in their respective jurisdiction and in other jurisdictions to ensure that these entities are in compliance with local standards on a worldwide basis.

On May 14, 2018, the Supreme Court of the United States struck down the Professional and Amateur Sports Protection Act, a 1992 law that barred state-authorized sports gambling with some exceptions and made Nevada the only state where a person could wager on the results of a single game. Since the Supreme Court's decision, sports gambling has commenced in numerous states and many more states have enabling legislation pending. We plan to explore expansion of our esports online wagering platform into other U.S. States, at the appropriate time, and may seek additional licenses in the United States.

The Unlawful Internet Gambling Enforcement Act of 2006 ("UIEGA") made it a federal offense, punishable by up to five years in prison, for a business to accept payments "in connection with the participation of another person in unlawful internet gambling." In support of such new prohibitions, the UIGEA uses a variety of terms — some of which are ambiguous or undefined. Initially, the UIGEA broadly defines a "bet or wager" as the staking or risking by any person of something of value upon the outcome of a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person will receive something of value in the event of a certain outcome.

Further, a "bet or wager" specifically includes a chance on a lottery or prize awarded predominantly by chance; a "scheme" as defined in Title 28, U.S.C. § 3702 relating to government-sponsored amateur or professional sports betting and, "any instructions or information pertaining to the establishment or movement of funds by the bettor or customer in, to, or from, an account with the business of betting or wagering." While this final prohibition incorporates the term "business of betting or wagering," that term is not specifically defined anywhere in the UIGEA. The only reference to that term comes in § 5362(2), which states the following: the term "business of betting or wagering" does not include the activities of a financial transaction provider, or any interactive computer service or telecommunications service.

Nonetheless, the law does contain specific prohibitions. In order to establish a violation of the UIGEA, it must be shown that:

&nbsp;&nbsp;&nbsp;&nbsp;1. A
 "person" was engaged in the business of betting or wagering;

2. That
 person knowingly accepted a financial instrument or proceeds thereof; and

3. That
 instrument was accepted (by the person) in connection with the participation of another person in "unlawful Internet gambling."

In the context of this statute "unlawful Internet gambling" is defined as follows:

To place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet where such bet or wager is unlawful under any applicable Federal or State law in the state or tribal lands in which the bet or wager is initiated, received, or otherwise made.

Therefore, the UIGEA only applies to online gambling transactions that are already prohibited by other state, federal, or tribal laws and thus, in order for the financial transaction to be prohibited by § 5363 of the UIGEA, the bet or wager must be "initiated, received, or otherwise made" in a place where such activity (the bet of wager) violates preexisting state, federal, or tribal law.

Similarly, several other laws provide federal law enforcement with the authority to enforce and prosecute gambling operations conducted in violation of underlying state gambling laws. As with UIEGA, these enforcement laws include the Illegal Gambling Business Act and the Travel Act. No violation of the UIGEA, the Illegal Gambling Business Act or the Travel Act can be found absent a violation of an underlying state law or other federal law. In addition, the Wire Act of 1961 (the "Wire Act") provides that anyone engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire communication which entitles the recipient to receive money or credit as a result of bets or wagers, or for information assisting in the placing of bets or wagers, will be fined or imprisoned, or both. However, the Wire Act notes that it shall not be construed to prevent the transmission in interstate or foreign commerce of information for use in news reporting of sporting events or contests, or for the transmission of information assisting in the placing of bets or wagers on a sporting event or contest from a State or foreign country where betting on that sporting event or contest is legal into a State or foreign country in which such betting is legal. In 2018, the U.S. Department of Justice (the "DOJ") reversed its previously issued opinion published in 2011, which stated that interstate transmissions of wire communications that do not relate to a "sporting event or contest" fall outside the purview of the Wire Act. The DOJ's updated opinion concluded instead that the Wire Act was not limited to wagering on sporting events or contests, and that certain of its provisions apply to non-sports-related wagering activity. In June 2019, a federal district court in New Hampshire ruled that the DOJ's new interpretation of the Wire Act was erroneous and vacated the DOJ's new opinion. On January 20, 2021, the First Circuit reaffirmed the district court's decision. The DOJ did not appeal to the Supreme Court. However, while a positive result, arguably the case is binding precedent only within the First Circuit, and only applies to the specific parties in the lawsuit. Accordingly, the Wire Act could still impact our ability to engage in online internet gaming in the future. See *'Recent Developments'* section above for a discussion of specific regulation items in relevant jurisdictions.

**Intellectual Property**

Within the EU, Esports Entertainment Malta owns several trademarks for its Lucky Dino, Kalevala, Casinojefe brands. Bethard controlled brands include Bethard, Fastbet, Betive and Betzerk.

GGC, LLC also owns the ggCircuit trademark.

Esports Entertainment Group owns the trademarks for its VIE brand and has applied for the trademark for its EGL brand, which is currently pending approval by the intellectual property office.

The Company owns the underlying IP rights for the iDefix and Phoenix platforms.

As of December 31, 2022, the Company has 162 employees, 154 of which are full time employees and eight of which are part time employees.

**Corporate Information**

Our principal executive office address is Block 6, Triq Paceville, St. Julians, Malta, STJ 3109. Our telephone number is +356 2713-1276. Our website is www.esportsentertainmentgroup.com. The information contained in our website is not a part of this prospectus.

We file annual, quarterly and other reports, proxy statements and other information with the SEC. The SEC maintains a website at <u>www.sec.gov</u> that contains reports, proxy and information statements, and other information regarding issuers such as our company that file electronically with the SEC.

**LEGAL PROCEEDINGS**

On January 6, 2023, our former Chairman and Chief Executive Officer, Grant Johnson, filed a lawsuit in the United State District Court for the Southern District of New York against the Company. The claim alleges breach by the Company of Mr. Johnson's employment agreement when it terminated him for "Cause" as defined in the agreement on December 3, 2022. Mr. Johnson seeks in excess of $1.0 million as well as 200,000 shares of our Common Stock, plus attorney's fees. The Company believes the claims are without merit and intends to defend against the claims vigorously. The case is captioned Grant Johnson v. Esports Entertainment Group, Inc. 1:22-cv-10861 (SDNY).

The Company at times may be involved in litigation relating to claims arising from its operations in the normal course of business. The Company is currently not involved in any litigation that it believes could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our Company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries' officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

**MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**

Our Common Stock is quoted for trading on Nasdaq under the symbol "GMBL".

*Approximate Number of Equity Security Holders*

As of [●], 2023, there were approximately [●] holders of record of our Common Stock. This number does not include shares held by brokerage clearing houses, depositories or others in unregistered form.

**Dividends**

We have never declared or paid cash dividends on our capital stock. We do not anticipate paying cash dividends on our common stock in the foreseeable future and for a substantial period of time, if ever. Payment of future dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our obligations under our Senior Convertible Note, contractual dividends on our outstanding preferred stock, financial condition, operating results, and current and anticipated cash needs. Investors should not purchase our common stock with the expectation of receiving cash dividends.

There are no restrictions in our Amended and Restated Articles of Incorporation or Amended and Restated Bylaws that prevent us from declaring dividends. The Nevada Revised Statutes, however, do prohibit us from declaring dividends where after giving effect to the distribution of the dividend:

&nbsp;&nbsp;&nbsp;&nbsp;1. we
 would not be able to pay our debts as they become due in the usual course of business; or

2. our
 total assets would be less than the sum of our total liabilities plus the amount that would be needed to satisfy the rights of stockholders
 who have preferential rights superior to those receiving the distribution.

**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS**

*This Management's Discussion and Analysis ("MD&A") is intended to provide an understanding of our financial condition, results of operations and cash flows by focusing on changes in certain key measures from year to year. This discussion should be read in conjunction with the audited Financial Statements and related notes provided herewith.*

**Cautionary Statement Regarding Forward-Looking Statements**

Our MD&A contains forward-looking statements that discuss, among other things, future expectations and projections regarding future developments, operations and financial condition. All forward-looking statements are based on management's existing beliefs about present and future events outside of management's control and on assumptions that may prove to be incorrect. If any underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or intended. We undertake no obligation to publicly update or revise any forward-looking statements to reflect actual results, changes in expectations or events or circumstances after the date this Registration Statement on Form S-1 is filed.

*This section of this report includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.*

**Overview**

Esports is skill based, competitive, organized video gaming by professional players, individually or as teams. Esports typically takes the form of organized, multiplayer video games that include genres such as real-time strategy, fighting, first-person shooter and multiplayer online battle arena games. As of September 30, 2022, the most popular esports games in the industry include *Dota 2 and League of Legends* (each multiplayer online battle arena games), and *Counter-Strike: Global Offensive* (a first-person shooter game). *Fortnite, Call of Duty¸ Overwatch,* and *Apex Legends* are other well-known popular esports games in the industry. Most major professional esports events and a wide range of amateur esports events are broadcast live via streaming services including twitch.tv and youtube.com.

EEG is an esports focused iGaming and entertainment company with a global footprint. EEG's strategy is to build and acquire betting and related platforms, and lever them into the rapidly growing esports vertical. We are focused on driving growth in two markets that include iGaming ("EEG iGaming") and esports ("EEG Games").

We have financed operations primarily through the sale of equity securities and short-term debt. Until revenues are sufficient to meet our needs, we will continue to attempt to secure financing through equity or debt securities.

**Basis of Presentation**

We operate two complementary business segments: Our EEG iGaming business and our EEG Games business.

*EEG iGaming*

Our EEG iGaming business is comprised of our casino and sportsbook product offerings. Currently, we operate our EEG iGaming segment primarily in Europe.

EEG iGaming includes the esports betting platform with full casino and sportsbook functionality and services for EEG iGaming customers. Our in-house gambling software platform, Phoenix, is a modern reimagined sportsbook that caters to both millennial esports bettors as well as traditional sports bettors. Phoenix is being developed through the assets and resources from our FLIP Sports Limited acquisition.

EEG's goal is to be a leader in the large and rapidly growing sector of esports real-money wagering, offering fans the ability to wager on professional esports events in a licensed and secure environment. From February 2021, under the terms of our MGA license, we are now able to accept wagers from residents of over 180 jurisdictions including countries within the EU, Canada, New Zealand and South Africa, on our ''Vie.bet'' platform.

Alongside the Vie.bet esports focused platform, EEG owns and operates:

● five online casino brands of Lucky Dino Gaming Limited and Hiidenkivi Estonia OU, its wholly-owned subsidiary (collectively referred to as "Lucky Dino"), licensed by the MGA on its in-house built iDefix casino-platform, and

● The recently acquired Bethard Group Limited ("Bethard") online sportsbook and casino brands, operating under MGA, Spanish, Irish and Swedish licenses.

In total, we currently hold four Tier-1 gambling licenses (Malta, Ireland, Spain and Sweden). Our acquisitions of Lucky Dino and Bethard provide a foothold in mature markets in Europe into which we believe we can cross-sell our esports offerings.

*<u>EEG Games</u>*

EEG Games' focus is on providing esports entertainment experiences to gamers through a combination of: (1) our proprietary infrastructure software, GGC, which underpins our focus on esports and is a leading provider of LAN center management software and services, enabling us to seamlessly manage mission critical functions such as game licensing and payments, (2) online tournaments (through our Esports Gaming League tournament platform), and (3) player-vs-player wagering. Currently, we operate our esports EEG Games business in the United States and Europe.

We believe that as the size of the market and the number of esports enthusiasts continues to grow, so will the number of esports enthusiasts who gamble on events, which would likely increase the demand for our platform.

**Impact of COVID-19**

COVID-19 emerged in December 2019 and has since adversely impacted global commercial activity, disrupted supply chains and contributed to significant volatility in financial markets.

The Company has previously indicated that a significant or prolonged decrease in consumer spending on entertainment or leisure activities may have an adverse effect on demand for the Company's product offerings, including in-person access to game centers and tournaments, reducing cash flows and revenues, and thereby materially harming the Company's business, financial condition and results of operations.

The ultimate impact of the COVID-19 pandemic on our business will depend on future developments, which are uncertain and may result in an extended period of continued business disruption and reduced operations. A materially disruptive resurgence of COVID-19 cases or the emergence of additional variants or strains of COVID-19 could cause other widespread or more severe impacts depending on where infection rates are highest. Any resulting financial impact cannot be reasonably estimated at this time but may have a material adverse impact on the Company's business, financial condition and results of operations. The Company will continue to monitor developments relating to disruptions and uncertainties caused by COVID-19.

**Key Performance Indicators**

In the industry, revenue is driven by discretionary consumer spending. We have no way of determining why customers spend more or less money; therefore, we are unable to quantify a dollar amount for each factor that impacts our customers' spending behaviors. However, some insight into the factors that we believe are likely to account for such changes and which factors may have a greater impact than others, include decreases in discretionary consumer spending have historically been brought about by weakened general economic conditions, such as lackluster recoveries from recessions, high unemployment levels, higher income taxes, low levels of consumer confidence, weakness in the housing market and high fuel or other transportation costs. Such insights are based solely on our judgment and professional experience, and no assurance can be given as to the accuracy of our judgments. The vast majority of our revenues is EEG iGaming revenue, which is highly dependent upon the number and volume and spending levels of customers.

**Reportable Segments**

At September 30, 2022, the Company has two reportable segments: EEG iGaming and EEG Games, consistent with June 30, 2022. Prior periods presented have been recast to reflect any change in reportable segments from the corresponding period.

**Financial Highlights**

The following tables set forth a summary of our financial results for the periods indicated and are derived from our unaudited condensed consolidated financial statements for the three months ended September 30, 2022 and 2021 and the audited consolidated financial statements for the years ended June 30, 2022 and 2021, respectively:

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended September 30,** | **Three Months Ended September 30,** |
|  | **2022** | **2021** |
| Net revenue | $9605264 | $16408291 |
| Total operating expenses | $15666785 | $25012891 |
| Total other income (expense), net | $1892930 | $8052219 |
| Net loss | $4168591 | $552381 |

---

---

| | | |
|:---|:---|:---|
|  | **Year Ended June 30,** | **Year Ended June 30,** |
|  | **2022** | **2021** |
| Net revenue | $58351650 | $16783914 |
| Total operating expenses excluding asset impairment charges | $101214859 | $42510352 |
| Asset impairment charges | $46498689 | $- |
| Total other income (expense), net | $(18544634) | $(4457832) |
| Net loss | $102232090 | $26372734 |

---

**Non-GAAP Information**

This report includes Adjusted EBITDA, which is a non-accounting principle generally accepted in the United States of America ("U.S. GAAP") performance measure that we use to supplement our results presented in accordance with U.S. GAAP. 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 U.S. GAAP. The Company uses this non-U.S. 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. Adjusted EBITDA, as calculated, may not be comparable to other similarly titled measures of performance of other companies in other industries or within the same industry. We define Adjusted EBITDA as earnings (loss) before, as applicable to the particular period, interest expense, net; income taxes; depreciation and amortization; stock-based compensation; cost of acquisition; asset impairment charges; loss on extinguishment of senior convertible note; loss on conversion of senior convertible note; change in fair value of derivative liability; change in fair value of warrant liability; change in fair value of contingent consideration; and other non-operating income (loss), net, and certain other non-recurring, non-cash or non-core items, as described in the reconciliation below, if not covered above.

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 and amortization, stock-based compensation, asset impairment charges, change in fair value of derivative liability and change in fair value of warrant liability), 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).

**Segment Revenues and Adjusted EBITDA**

The tables below present our Segment Revenues and Adjusted EBITDA reconciled to our net loss, for the periods indicated:

---

| | | |
|:---|:---|:---|
|  | **For the three months ended<br> September 30,** | **For the three months ended<br> September 30,** |
|  | **2022** | **2021** |
| **Revenues:** |  |  |
| EEG iGaming segment | 8595346 | 14662588 |
| EEG Games segment | 1009918 | 1745703 |
| &nbsp;&nbsp;&nbsp;**Total** | 9605264 | 16408291 |
| **Net loss:** | (4168591) | (552381) |
| ***Adjusted for:*** |  |  |
| Interest expense | 1058408 | 2345196 |
| Change in fair value of derivative liability | (274864) |  |
| Change in fair value of warrant liability | (2450556) | (11808600) |
| Change in fair value of contingent consideration | (179468) |  |
| Other non-operating income (loss), net | (46450) | 1411185 |
| Depreciation and amortization | 1862718 | 3230736 |
| Right of use asset amortization | 18443 | 111616 |
| Stock-based compensation | 921991 | 882372 |
| Cost of acquisition | 35930 | 62999 |
| &nbsp;&nbsp;&nbsp;**Total Adjusted EBITDA** | (3222429) | (4316877) |
| **Adjusted EBITDA** |  |  |
| EEG iGaming segment | (461195) | (944227) |
| EEG Games segment | (546796) | (876508) |
| Other<sup>(1)</sup> | (2214448) | (2496142) |
| &nbsp;&nbsp;&nbsp;**Total Adjusted EBITDA** | (3322439) | (4316877) |

---

(1) Other comprises of corporate and overhead costs.

(2) We have no intersegment revenues or costs and thus no eliminations required.

(3) We define Adjusted EBITDA as earnings (loss) before, as applicable to the particular period, interest expense; income taxes; depreciation and amortization including right of use asset amortization; stock-based compensation; cost of acquisition; asset impairment charges; loss on extinguishment of senior convertible note; loss on conversion of senior convertible note; change in fair value of derivative liability; change in fair value of warrant liability; change in fair value of contingent consideration; and other non-operating income (loss), net and certain other non-recurring, non-cash or non-core items (included in table above).

---

| | | |
|:---|:---|:---|
|  | **For the year ended June 30,** | **For the year ended June 30,** |
|  | **2022** | **2021** |
| **Revenues:** |  |  |
| EEG iGaming segment | 53104795 | 16231028 |
| EEG Games segment | 5246855 | 552886 |
| &nbsp;&nbsp;&nbsp;**Total** | **58351650** | **16783914** |
| **Net loss:** | **(102232090)** | **(26372734)** |
| ***Adjusted for:*** |  |  |
| Interest expense | 6423039 | 698973 |
| Loss on conversion of senior convertible note | 5999662 |  |
| Loss on extinguishment of senior convertible note | 28478804 |  |
| Change in fair value of derivative liability | 10882241 |  |
| Change in fair value of warrant liability | (31468270) | 1549924 |
| Change in fair value of contingent consideration | (2355308) | 1748607 |
| Other non-operating income (loss), net | 584466 | 460328 |
| Income tax benefit (expense) | (5674442) | (3811536) |
| Depreciation and amortization | 12026581 | 3416252 |
| Asset impairment charges | 46498689 |  |
| Stock-based Compensation | 5165653 | 4129726 |
| Cost of acquisition | 269012 | 3509365 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Adjusted EBITDA** | (25401963) | (14671095) |
| **Adjusted EBITDA** |  |  |
| EEG iGaming segment | (7526205) | (6740890) |
| EEG Games segment | (4915549) | (454467) |
| Other<sup>(1)</sup> | (12960209) | (7475738) |
| &nbsp;&nbsp;&nbsp;**Total Adjusted EBITDA** | (25401963) | (14671095) |

---

(1) Other comprises of corporate and overhead costs.

(2) We have no intersegment revenues or costs and thus no eliminations required.

(3) We define Adjusted EBITDA as earnings (loss) before, as applicable to the particular period, interest expense, net; income taxes; depreciation and amortization; stock-based compensation; cost of acquisition; asset impairment charges; loss on extinguishment of senior convertible note; loss on conversion of senior convertible note; change in fair value of derivative liability; change in fair value of warrant liability; change in fair value of contingent consideration; and other income (loss), and certain other non-recurring, non-cash or non-core items (included in table above).

**Results of Operations**

*Comparison of the three months ended September 30, 2022 and 2021*

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this report. The financial data is at the consolidated and reporting segment levels and reported in U.S. Dollar ($).

**Revenue**

Revenue totaled $9.6 million in the three months ended September 30, 2022, a decrease of $6.8 million, or 41%, from the $16.4 million recorded in the three months ended September 30, 2021. The decrease is primarily attributable to the decreased in the iGaming operations of Lucky Dino, Bethard and Argyll that were impacted by regulatory changes in the Netherlands, Finland and the UK, and the worsening investment and market conditions. The decrease in the iGaming segment revenue was $6.1 million falling from $14.7 million to $8.6 million. Revenue in the EEG Games segment also decreased $0.7 million from $1.7 million to $1.0 million due to the disposal of the Helix Holdings, LLC game center assets in Foxboro, MA and North Bergen, NJ that occurred in June 2022 and lower other revenues.

**Cost of Revenue**

Cost of revenue totaled $3.8 million in the three months ended September 30, 2022, a decrease of $2.7 million, or 42%, from the $6.5 million recorded in the three months ended September 30, 2021. The decrease is primarily attributable to the decrease in the iGaming operations of Lucky Dino, Bethard and Argyll in the EEG iGaming segment and includes corresponding EEG iGaming decreases in line with revenue of $1.4 million for payment processing fees, platform costs, gaming duties and costs related to revenue sharing arrangements, $0.4 million for the game provider expenses and $0.2 million for lower other direct expenses related to the delivery of services. EEG Games also had a reduction in costs with $0.2 million lower platform costs and $0.5 million lower game provider costs.

**Sales and Marketing**

Sales and marketing expense totaled $2.4 million in the three months ended September 30, 2022, a decrease of $5.0 million, or 68%, compared to the $7.4 million recorded for the three months ended September 30, 2021. The decrease was primarily attributable to a $0.3 million reduction in marketing, a $0.2 million reduction in sponsorship and $3.1 million lower affiliate costs related to the EEG iGaming segment and a $1.4 million reduction in Corporate expense driven by $1.2 million less incurred for sponsorship agreements with professional sports clubs and our service partners.

**General and Administrative**

General and administrative expense totaled $9.5 million for the three months ended September 30, 2022, a decrease of $1.7 million, or 15%, compared to the $11.2 million recorded for the three months ended September 30, 2021. The decrease was primarily attributable to decreases of $1.1 million in payroll costs, $0.6 million depreciation and amortization, offset by a $0.1 million increase related to other general and administrative cost primarily including incremental costs for information technology related disbursements from the EEG iGaming segment, and further decreases of $0.2 in payroll costs, $0.8 million depreciation and amortization, and $0.2 million related to other general and administrative costs from the EEG Games segment. Corporate general and administrative costs increased $1.0 million driven by the $0.5 million higher payroll costs and $0.6 million increase in options related share based compensation, offset by $0.1 million less in acquisition related costs due to Bethard being the sole acquisition at the beginning of the three months ended September 30, 2022 with no acquisitions in the three months ended September 30, 2021.

**Other Income (expense)**

Other income (expense), net decreased $6.2 million from an income of $8.1 million for the three months ended September 30, 2021 to income of $1.9 million for the three months ended September 30, 2022. The other expense for the three months ended September 30, 2022 results primarily from $1.1 million of interest expense related to the Senior Convertible Note, offset by other income primarily made up of $0.3 million for the change in the fair value of the derivative liability on Senior Convertible Note (as defined below), $2.5 million from the reduction in fair value of the warrant liability and $0.2 million for the change in the fair value of the contingent consideration due as part of the Bethard transaction from the prior year. The driver of the change in fair value of the warrants was a decrease of $1.5 million for the September 2022 Warrants (as defined below) issued as part of the September 2022 Offering (as defined below) that decreased from the $5.3 million valued on issuance at September 19, 2022 to $3.8 million at September 30, 2022 and a decrease of $0.9 million for the March 2022 Warrants (as defined below) from $2.1 million at June 30, 2022 to $1.2 million at September 30, 2022. The other income for the three months ended September 30, 2021 results primarily from a reduction in fair value of the warrant liability established for warrants convertible into shares of common stock that had been issued to the holder of the Senior Convertible Note. The fair value of the warrant liability decreased $11.8 million from $23.5 million at June 30, 2021 to $11.7 million at September 30, 2021. This was offset by interest expense primarily attributable to amortization of the debt discount and cash interest payable on the Senior Convertible Note of $2.3 million, as well as recognition of an expense of $1.5 million for the Company's estimate of the amount payable to the Holder of the Old Senior Convertible Note (as defined below) under the registration rights agreement.

*Comparison of Year ended June 30, 2022 and 2021*

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this report. The financial data is at the consolidated level and reported in U.S. Dollar ($).

**Revenue**

Revenue totaled $58.4 million in the year ended June 30, 2022, an increase of $41.6 million, or 248%, from the $16.8 million recorded in the year ended June 30, 2021. The increase is primarily attributable to the iGaming operations of Lucky Dino and Argyll that were acquired during the fiscal year ended June 30, 2021 and Bethard that was acquired in July 2021 of fiscal year ended June 30, 2022, increasing the iGaming segment revenue by $36.9 million from $16.2 million to $53.1 million and GGC that was also acquired during the fiscal year ended June 30, 2021 and was the primary factor in the increase in EEG Games revenue of $4.7 million from $0.6 million to $5.3 million.

**Cost of Revenue**

Cost of revenue totaled $24.2 million in the year ended June 30, 2022, an increase of $16.3 million, or 206%, from the $7.9 million recorded in the year ended June 30, 2021. The increase is primarily attributable to the EEG iGaming segment of Lucky Dino, Argyll and Bethard acquisitions and includes $9.2 million for additional payment processing fees, platform costs, gaming duties and costs related to revenue sharing arrangements, $3.0 million additional for the game provider expenses and $1.3 million higher other direct expenses related to the delivery of services. EEG Games incurred $1.6 million higher platform costs, $1.1 million higher game provider costs and $0.1 million other direct expenses across the segment.

**Sales and Marketing**

Sales and marketing expense totaled $25.7 million in the year ended June 30, 2022, an increase of $15.7 million, or 157%, over the $10.0 million recorded for the year ended June 30, 2021. The increase was primarily attributable to $12.0 million higher marketing and $0.9 million higher affiliate costs related to EEG iGaming segment and $2.8 million in additional Corporate expense for sponsorship agreements with professional sports clubs and our service partners.

**General and Administrative**

General and administrative expense totaled $51.3 million for the year ended June 30, 2022, an increase of $26.7 million, or 109%, over the $24.6 million recorded for the year ended June 30, 2021. The increase was primarily attributable to increases of $8.7 million in payroll costs, $5.8 million depreciation and amortization, $2.5 million related to other general and administrative cost primarily including incremental costs for information technology related disbursements from the EEG iGaming segment, and $4.6 million in payroll costs, $2.9 million depreciation and amortization, and $1.5 million related to other general and administrative cost including professional fees from the EEG Games segment. Corporate general and administrative costs increased $0.7 million with $2.0 million in higher payroll costs, $1.1 million higher stock based compensation, and $0.8 million increase in other general and administrative cost including other, professional fees and legal fees, offset by $3.2 million less in acquisition related costs due to Bethard being the sole acquisition at the beginning of the year ended June 30, 2022 compared to the multiple acquisitions in the year ended June 30, 2021.

**Impairment**

During the third quarter the Company concluded that goodwill impairment indicators existed based on the significant volatility in the Company's stock price where the Company experienced a sustained reduction from the middle of the third quarter through March 31, 2022 and subsequently. As of March 31, 2022, the Company determined that in-person attendance at its Helix and customer game centers was not expected to attain levels previously forecasted and that under the current liquidity and investment constraints is the Company was less likely to reach the previously forecasted revenue and profits for EGL and GGC. These factors and the continuing impacts of the COVID-19 pandemic, uncertainties caused by inflation and world stability, resulted in the Company evaluating its goodwill and long-lived assets, including intangible assets, for impairment as of March 31, 2022. During the third quarter the Company recognized $38.6 million of asset impairment charges, including $23.1 million of goodwill and $15.5 million of other long-lived assets in the EGL, GGC and Helix reporting units from the EEG Games segment. The Company tests its goodwill for impairment annually on April 1. There was no further impairment identified as of the annual testing date from that recognized as of March 31, 2022. In the three months ending June 30, 2022, while implementing cost saving initiatives, and with the continuing liquidity and investment restraints and further reduction in the Company's already deflated stock price, the Company again concluded that as of June 30, 2022, goodwill impairment indicators existed, and the Company evaluated its goodwill and long-lived assets, including intangible assets, for further impairment. The Company identified that with the additional regulation and expected costs of continuing in the UK market that the iGaming Argyll (UK) goodwill and asset group intangible assets and equipment were impaired resulting in additional asset impairment charges of $7.9 million, including $3.9 million of goodwill and $4.0 million of other long-lived assets in the iGaming Argyll reporting unit from the EEG iGaming segment, for a total for the year ended June 30, 2022 of $46.5 million. There were no impairment charges for the year ended June 30, 2021.

**Other Income (expense)**

Other income (expense), net changed $14.0 million from an expense of $4.5 million for the year ended June 30, 2021 to an expense of $18.5 million for the year ended June, 2022. The other expense for the year ended June 30, 2022 results primarily from the $10.9 million expense for derivative liabilities on senior convertible note, $28.5 million of loss on extinguishment primarily attributable to amortization of the debt discount, $6.0 million loss on the conversion of the Senior Convertible Note, driven by the conversion of a principal provided to the Senior Convertible Note holder as part of the October 13, 2021 waiver provided on the covenants related to the Senior Convertible Note and $6.4 million in interest expense. These expenses were offset by other income primarily made up of $2.4 million for the change in the fair value of the contingent consideration due as part of the Bethard transaction and $31.5 million from the reduction in fair value of the warrant liability. The Series A and Series B Warrants fair value decreased from $23.5 million as of June 30, 2021 to $0.1 million and the March 2022 Warrants and the April 2022 Overallotment Warrants decreased from initial fair value of $10.2 million to $2.1 million as of June 30, 2022, resulting in a total gain of $31.5 million. The other expense for the year ended June 30, 2021 primarily included a charge of $4.7 million related to the revaluation of the warrant liability recorded in connection with the acquisition of Argyll through issuance of Common Stock, a charge of $1.7 million related to the settlement of the contingent consideration liability for the FLIP and EGL acquisitions through the issuance of Common Stock, and interest expense of $0.7 million related primarily to the Senior Convertible Note. This was partially offset by a benefit of $3.2 million related to the revaluation of Series A and Series B warrants issued in connection with the Senior Convertible Note dated June 2, 2021.

**Income Tax**

The income tax benefit for the year ended June 30, 2022 and 2021 was $5.7 million and $3.8 million, respectively. The income tax benefit recorded for the year ended June 30, 2022 results primarily from the release of valuation allowance of $5.7 million that followed an assessment of the realizability of our deferred tax assets subsequent to the completion of the Bethard acquisitions. The income tax benefit recorded for the year ended June 30, 2021 results primarily from the release of valuation allowance of $4.1 million that followed an assessment of the realizability of our deferred tax assets subsequent to the completion of the Argyll, EGL, GGC and Helix acquisitions. It is anticipated that our deferred tax assets will be realized through future reversal of deferred tax liabilities. The income tax benefit was offset by income tax expense related to one of our foreign subsidiaries as well as the estimated exposure for accrued interest and penalties that may be imposed related to tax filings.

***Recent Accounting Pronouncements***

For a discussion of recent accounting pronouncements, see Note 2, *Summary of Significant Accounting Policies.*

**Capital Resources and Liquidity**

***Liquidity and Going Concern***

The Company must evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company's ability to continue as a going concern for one year from the date the unaudited condensed consolidated financial statements included in this report are issued. The evaluation of going concern under the accounting guidance requires significant judgment.

The Company has determined that certain factors raise substantial doubt about its ability to continue as a going concern for a least one year from the date of issuance of the unaudited condensed consolidated financial statements included in this report. One such factor considered by the Company is its compliance with certain debt covenants under terms of the Senior Convertible Note, issued by the Company on February 22, 2022 in the principal amount of $35 million with a September 30, 2022 outstanding carrying value of $32.2 million. The Company has not maintained compliance with certain debt covenants and is currently in default under the terms of the Senior Convertible Note. The Company repaid principal of $2.8 million during the three months ended September 30, 2022, using proceeds from the September 2022 equity financing ("September 2022 Offering"). The maturity date of the Senior Convertible Note is June 2, 2023. The Senior Convertible Note is classified as a current liability on the unaudited condensed consolidated balance sheet and due to the default it may be redeemed by the Holder prior to its maturity date. The Company has also recorded a derivative liability for the alternate conversion in the Senior Convertible Note of $9.1 million in current liabilities on the unaudited condensed consolidated balance sheet that may be due to the Holder as part of the make-whole liability under the default terms of the Senior Convertible Note. The cash liability calculated under the terms of the Senior Convertible Note of approximately $606 million is materially higher than the fair value of the derivative liability of $9.1 million calculated at September 30, 2022. The calculated make-whole liability may differ materially from the amount at which the Company may be required to pay under the Senior Convertible Note. The Company has held non-binding discussions with the Holder to restructure its obligation under the Senior Convertible Note. However, there can be no guarantee that the Company will be able to reach an agreement to restructure the Senior Convertible Note.

In addition to compliance with debt covenants, the Company considered that it had an accumulated deficit of $153.3 million as of September 30, 2022 and that it has had a history of recurring losses from operations and recurring negative cash flows from operations as it has prepared to grow its esports business through acquisition and new venture opportunities. At September 30, 2022, the Company had total current assets of $10.2 million and total current liabilities of $62.5 million. Net cash used in operating activities for the three months ended September 30, 2022 was $4.6 million, which includes a net loss of $4.2 million. The Company also considered its current liquidity as well as future market and economic conditions that may be deemed outside the control of the Company as it relates to obtaining financing and generating future profits. As of December 31, 2022, the Company had approximately $0.6 million of available cash on-hand. On December 21, 2022, the Company closed an offering (the "Registered Direct Offering") in which it sold: (a) 7.065 million shares of Common Stock to the Holder and (b) pre-funded warrants to purchase up to 17.85 million at a price of $0.0937 per warrant, directly to the Holder, with all but $0.001 per warrant prepaid to the Company at the closing. The gross proceeds to us from the sale of the shares of Common Stock and pre-funded warrants before deducting underwriting discounts and commissions and offering expenses payable by the Company was $2.3 million. The Company remitted approximately $1.0 million to the Holder to be applied to accrued interest and future interest payments under the Senior Convertible Note. The net proceeds received by the Company, after deducting underwriting discounts and commissions and offering expenses payable by the Company and amounts remitted to the Holder was approximately $1.0 million. On September 19, 2022 the Company closed an offering (the "September 2022 Offering") in which it sold: (a) 30 million shares of Common Stock and (b) warrants to purchase up to 30 million shares of Common Stock, at an exercise price of $0.25 per share (the "September 2022 Offering Warrants"), at an aggregate price of $0.25 per share and accompanying September 2022 Offering Warrant. The gross proceeds to us from the sale of the shares of Common Stock and Warrants before deducting underwriting discounts and commissions and offering expenses payable by the Company was $7.5 million. On the issuance date, the Company also granted an overallotment to the underwriters of the offering for 3.6 million overallotment warrants ("September 2022 Overallotment Warrants"), at a purchase price of $0.01 per warrant, with an exercise price of $0.25 per warrant (the September 2022 Offering Warrants and September 2022 Overallotment Warrants are collectively referred to as the "September 2022 Warrants"). Total proceeds from the September 2022 Overallotment Warrants were less than $0.1 million. The Company remitted to the Holder an amount of $2.3 million equal to fifty percent (50%) of all net proceeds above $2.0 million following the payment of 7% in offering fees including underwriting discounts and commissions. In addition, as part of the September 2022 Offering, the Holder purchased $0.5 million of securities (2.1 million shares of Common Stock and 2.1 million September 2022 Warrants) and the Company paid the Holder an additional $0.5 million. The proceeds remitted to the Holder of the Senior Convertible Note reduced the principal balance of the Senior Convertible Note on a dollar-for-dollar basis. The net proceeds received by the Company, after deducting underwriting discounts and commissions and offering expenses payable by the Company and amounts remitted to the Holder was $4.1 million. On March 2, 2022 the Company closed an offering (the "March 2022 Offering") in which it sold 15 million units at $1.00 consisting of one share of Common Stock and one warrant for a total of 15 million warrants with an exercise price of $1.00 (the "March 2022 Offering Warrants"). There was also an overallotment option exercised to purchase warrants to purchase an additional 2.3 million shares of common stock (the "April 2022 Overallotment Warrants") with an exercise price of $1.00 issued to the underwriters of the offering on April 1, 2022 (the March 2022 Offering Warrants and the April 2022 Overallotment Warrants are collectively referred to as the "March 2022 Warrants"). The March 2022 Offering provided net cash proceeds of $13.6 million.

The amount of available cash on hand on January 12, 2023, one business day preceding this filing, was $0.5 million.

The Company believes that its current level of cash and cash equivalents is not sufficient to fund its operations and obligations without additional financing. Although the Company has financing available, as further described below, the ability to raise financing using these sources is subject to several factors, including market and economic conditions, performance, and investor sentiment as it relates to the Company and the esports and iGaming industry. The combination of these conditions was determined to raise substantial doubt regarding the Company's ability to continue as a going concern for a period of at least one year from the date of issuance of this prospectus.

In determining whether the Company can overcome the presumption of substantial doubt about its ability to continue as a going concern, the Company may consider the effects of any mitigating plans for additional sources of financing. The Company identified additional financing sources it believes, depending on market conditions, may be available to fund its operations and drive future growth which include: (i) the potential proceeds from the exercise of the 33.6 million September 2022 Warrants, exercisable at $0.25, outstanding at September 30, 2022, (ii) the potential proceeds from the exercise of the 17.3 million March 2022 Warrants, exercisable at $1.00, outstanding at September 30, 2022, (iii) the ability to sell shares of Common Stock of the Company through various forms of offerings, and (iv) the ability to raise additional financing from other sources. The Company is also continuing discussions with the Holder to restructure the payment terms and debt covenants.

The Company's sources and (uses) of cash for the three months ended September 30, 2022 and 2021 are shown below:

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| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
| Cash used in operating activities | $4594854 | $3391219 |
| Cash used in investing activities | $- | $15042881 |
| Cash provided by (used in) financing activities | $3838549 | $(899362) |

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At September 30, 2022, we had total current assets of $10.2 million and total current liabilities of $62.5 million. Net cash used in operating activities for the three months ended September 30, 2022 was $4.6 million, which includes a net loss of $4.2 million, offset by net non-cash and balance sheet adjustments of $0.4 million.

There was no net cash used in investing activities for the three months ended September 30, 2022.

Net cash provided by financing activities for the three months ended September 30, 2022 totaled $3.8 million, which related to $6.9 million net proceeds from the September 2022 Offering, offset by the repayments of part of the Senior Convertible Note principal of $2.8 million, repayments of notes payable and finance lease for less than $0.1 million and the payments of the dividends on the 10% Series A cumulative redeemable convertible preferred stock of $0.2 million.

The Company's sources and (uses) of cash for the year ended June 30, 2022 and 2021 are shown below:

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| | | |
|:---|:---|:---|
|  | 2022 | 2021 |
| Cash used in operating activities | $21006437 | $18883006 |
| Cash used in investing activities | $20080376 | $56133256 |
| Cash provided by financing activities | $23488285 | $86356201 |

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At June 30, 2022, we had total current assets of $10.0 million and total current liabilities of $65.8 million. Net cash used in operating activities for the year ended June 30, 2022 was $21.0 million, which includes a net loss of $102.2 million, offset by net non-cash adjustments of $72.4 million.

Net cash used in investing activities for the year ended June 30, 2022 totaled $20.1 million principally related to the Bethard acquisition.

Net cash provided by financing activities for the year ended June 30, 2022 totaled $23.5 million, which related to proceeds from the issuance of 15 million units, each consisting of one share of Common Stock and one March 2022 Warrant, as part of the March 2022 Offering, the issuance of the shares of the 10% Series A cumulative redeemable convertible preferred stock and the issuance of Common Stock of 1.2 million shares through the at-the-money, partially offset by the payment of the dividends on the 10% Series A cumulative redeemable convertible preferred stock, the contingent consideration of Bethard and repayments of notes payable and finance lease.

These above plans are likely to require the Company to place reliance on several factors, including favorable market conditions, to access additional capital in the future. These plans were therefore determined not to be sufficient to overcome the presumption of substantial doubt about the Company's ability to continue as a going concern.

**CRITICAL ACCOUNTING POLICIES AND ESTIMATES**

Management's discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of our consolidated financial statements requires our management to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. These estimates are based on management's historical and industry experience and on various other assumptions that are believed to be reasonable under the circumstances. On a regular basis, we evaluate these accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results may differ from our estimates, and such differences could be material.

A full discussion of our significant accounting policies is contained in Note 2 to our consolidated financial statements, for the fiscal year ended June 30, 2022.

We believe that the following accounting estimates are the most critical to aid in fully understanding and evaluating our financial results. These estimates require our most difficult, subjective or complex judgments because they relate to matters that are inherently uncertain. We have reviewed these critical accounting policies and estimates and related disclosures with our Audit Committee.

***Revenue recognition***

**Revenue and Cost Recognition**

The revenue of the Company is currently generated from online casino and sports betting (referred to herein as "EEG iGaming Revenue"), and esports revenue (referred to herein as "EEG Games Revenue"), consisting of the sales of subscriptions to access cloud-based software used by independent operators of game centers, from consulting and data analytic services provided to game operators ("EEG Games Esports and Other Revenue"), and from the provision of esports event and team management services ("EEG Games Esports Event Management and Team Service Revenue"). The Company recognizes revenue in accordance with Accounting Standards Codification ("ASC") Topic 606 – *Revenue from Contracts with Customers* ("ASC 606") when control of a product or service is transferred to a customer. The amount of revenue is measured at the transaction price, or the amount of consideration that the Company expects to receive in exchange for transferring a promised good or service. The transaction price includes estimates of variable consideration to the extent that it is probable that a significant reversal of revenue recognized will not occur.

Revenue generating activities of the Company may be subject to value added tax ("VAT") in certain jurisdictions in which the Company operates. Revenue is presented net of VAT in the consolidated statements of operations. VAT receivables and VAT payables are included in other receivables and accounts payable and accrued expenses, respectively on the consolidated balance sheets. Sales to customers do not have significant financing components or payment terms greater than 12 months.

***EEG iGaming Revenue***

EEG iGaming revenue is derived from the placement of bets by end-users, also referred to as customers, through online gaming sites. The transaction price in an iGaming contract, or Net Gaming Revenue ("NGR"), is the difference between gaming wins and losses, as further reduced by any nondiscretionary incentives awarded to the customer. Gaming transactions involve four performance obligations, namely the settlement of each individual bet, the honoring of discretionary incentives available to the customer through loyalty reward programs, the award of free spin and deposit match bonuses, and the winning of a casino jackpot. The total amount wagered by a customer is commonly referred to as the win or Gross Gaming Revenue ("GGR"). The GGR is allocated to each performance obligation using the relative standalone selling price determined for iGaming contracts.

Revenue recognition for individual wagers is recognized when the gaming occurs, as such gaming activities are settled immediately. The revenue allocated to incentives, such as loyalty points offered through a rewards program, is deferred and recognized as revenue when the loyalty points are redeemed. Revenue allocated to free spins and deposit matches, referred to as bonuses, are recognized at the time that they are wagered. The revenue for jackpot games is recognized when the jackpot is won by the customer. The Company applies a practical expedient by accounting for its performance obligations on a portfolio basis as iGaming contracts have similar characteristics. The Company expects the application of the revenue recognition guidance to a portfolio of iGaming contracts will not materially differ from the application of the revenue recognition guidance on an individual contract basis.

The Company evaluates bets that its users place on websites owned by third party brands in order to determine whether it may recognize revenue on a gross basis, when acting as the principal provider of the wagering service, or on a net basis, when acting as an intermediary or agent. The principal in a wagering service involving a third party is generally the entity that controls the wagering service such that it has a right to the services being performed by the third party and can direct the third party in delivery of the service to its users. The Company records revenue on a gross basis as it has determined it is the principal in transactions involving third parties, such as revenue sharing arrangements, as it controls the wagering service being offered to the users such that it has a right to the service performed by third parties and can further direct third parties in providing services to users. The Company further records expenses related to its revenue sharing arrangements and other third-party iGaming expenses within costs of revenue in the consolidated statements of operations.

***EEG Games Revenue***

*EEG Games Esports and Other Revenue*

The Company derives revenue sales of subscriptions to access cloud-based software used by independent operators of game centers, as well as from consulting and data analytic services provided to game operators. The revenue derived from the sale of subscription services to cloud-based software used by game centers is recognized over the term of the contract, which generally can range from one month to one year in duration, beginning on the date the customer is provided access to the Company's hosted software platform. The revenue from the operation of game centers by the Company was recognized when a customer purchased time to use the esports gaming equipment at each center. The revenue from time purchased by a customer and from the sale of concessions was recognized at the point of sale.

The software subscriptions also allow for game center operators to enable their equipment to mine cryptocurrency when gaming stations are not in use by the end user. The software allows the participating game center operators to contribute their computer power for the purpose of adding a block to the blockchain within a mining pool where the Company and the participating game center operators are participants. The Company's software enables the participating game center operators to enter into mining pools with mining pool operators to provide computing power to the mining pool to mine cryptocurrency digital assets. The Company and the participating game center operators are entitled to a fractional share of the fixed cryptocurrency digital asset award the mining pool operator receives (less transaction fees to the mining pool operator) for successfully adding a block to the blockchain. The Company and participating game center operators' fractional share is based on the proportion of computing power contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. A digital asset award is received by the Company from the mining pool, in the form of cryptocurrency (i.e., Ethereum), for successfully adding a block to the blockchain. The Company records a payable for the amount due to each participating game center operator, in the form of U.S. dollars, based on the participating game center operators' computing power contributed toward the mining of the award less a fee charged by the Company. The amounts due to the participating game center operators are paid in U.S. dollars. The Company recognizes the fair value of the digital awards, net of fees and amounts payable to the game center operators, as revenue at the time the digital award is added to the blockchain using the price of the digital coin quoted in U.S. dollars. The transaction consideration of the digital award the Company receives, if any, is non-cash consideration. The Company records revenue on a net basis as it has determined it is the agent in the transactions with the mining pool and facilitates the provision of the computing power and payments for the participating game center operators. The transaction consideration for the mining of cryptocurrency is variable consideration as it is based on the number of blocks added to the blockchain and the amount of the digital asset received from the mining pool. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is currently no specific definitive guidance under U.S. GAAP or alternative accounting framework for the accounting for digital assets recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the Financial Accounting Standards Board ("FASB"), the Company may be required to change its policies, which could impact the Company's consolidated financial position and results from operations.

The Company further provides consultation services related to the use of hardware and equipment for gaming operations together with implementation services that include sourcing, training, planning, and installation of technology. The Company considers services related to hardware and equipment, implementation, and any design of user interface for the customer as separate performance obligations. Revenue for hardware equipment and design of custom user interface is recognized at a point in time upon delivery and completion. Implementation services are recognized over time, as services are performed.

The Company also has contracts with software companies to provide talent data analytics and related esports services, which include analytic development, other related services to develop software and applications for tournaments, to provide data support, data gathering, gameplay analysis and reporting which includes talent analytics and related esports services, including analytic development, data analysis, survey design, interview services, player dossiers, and expert services. The Company recognizes revenue from its data analytic services over the life of the contract utilizing the output method, using a direct measurement of the value to the customer of the goods or services transferred to date relative to the remaining goods or services promised under the contact. The Company elected to use the right to invoice practical expedient and recognize revenue based on the amounts invoiced. The payment terms and conditions vary by contract; however, the Company's terms generally require payment within 30 to 60 days from the invoice date.

The Company has partnership contracts with strategic customers within the esports industry. The partnership contracts are negotiated agreements, which contain both licensing arrangements of intellectual property and development services, including fixed and variable components. The variability of revenue is driven by development plans and results of sales as specified by the partnership contract, which are known as of an invoice date. Partnership contracts generally do not have terms that extend beyond one year. The Company considers licensing arrangements and development services as separate performance obligations. Licensing revenues are recorded over time. Revenue associated with development is recognized over time, as labor is incurred.

Contracts that contain multiple performance obligations require an allocation of the transaction price to each distinct performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct good or service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account the Company's overall pricing objectives, considering market conditions and other factors, including the value of the deliverables in the contracts, customer demographics, geographic locations, and the number and types of users within the contracts.

*EEG Games Esports Event Management and Team Service Revenue*

The Company derives revenue from esports event management and team services. Esports event management services support the creation, production and delivery of an esports event by providing event staffing, gaming consoles, and other technical goods and services for a customer event that is either hosted live in person or online. The revenue generated from esports event management services is generally earned on a fixed fee basis per event.

The esports team services offerings of the Company include recruitment and management services offered to sports clubs to facilitate their entrance into esports tournament competition. Team services provided to a customer may include player recruitment, administration of player contracts, processing of tournament admission, providing logistical arrangements, as well as providing ongoing support to the team during the event. Team services are earned on a fixed fee basis per tournament.

Esports event management and team services revenues are recognized over the term of the event or the relevant contractual term for services as this method best depicts the transfer of control to the customer. The Company recognizes revenue for event management services based on the number of days completed for the event relative to the total days of the event. Revenue from team management services is recognized from inception of the contract through the end of the tournament using the number of days completed relative to the total number of days in the contract term. Revenue collected in advance of the event management or team services is recorded as deferred revenue on the consolidated balance sheets. The Company may also enter into profit sharing arrangements which are determined based on the net revenue earned by the customer for an event in addition to a fixed fee. Revenue recognition for profit sharing arrangements is recognized at the time the revenue from the event is determined, which is generally at the conclusion of the event. An event or team services contact may further require the Company to distribute payments to event or tournament attendees resulting in the recognition of a processing fee by the Company. The Company does not recognize revenue from the processing of payments until the conclusion of the event or tournament.

The Company evaluates the service being provided under an esports event and team services contract to determine whether it should recognize revenue on a gross basis as the principal provider of the service, or on a net basis in a manner similar to that of an agent. The Company has determined that for esports event and team services contracts that allow for the assignment of individual tasks to a third-party contractor, the Company acts as the principal provider of the service being offered to the customer as it remains primarily responsible for fulfilling the contractual promise to the customer. In profit sharing arrangements, such as events that allow for the Company to share in the revenue earned by a customer for an event, the Company has determined it acts in the role of an agent to the customer as the event creator. The Company has also determined it acts as an agent when it collects a processing fee for performing the service of distributing prize money on behalf of its customers to event or tournament winners.

***Contract Liabilities***

Liabilities to customers include both player liabilities, consisting of a free spin bonus and a deposit match bonus, and the player reward liabilities. The free spin bonus provides the user the opportunity to a free play, or otherwise spin, on an iGaming casino slot machine without withdrawing a bet amount from the player's account. The deposit match bonus matches a player's deposit up to a certain specified percentage or amount. These bonuses represent consideration payable to a customer and therefore are treated as a reduction of the transaction price in determining NGR. The Company also offers non-discretionary loyalty rewards points to customers that can be redeemed for free play or cash. The Company allocates revenue from wagers to loyalty points rewards earned by users, thereby deferring a portion of revenue from users that participate in a loyalty reward program. The amount of revenue deferred related to loyalty points available to users is based on the estimated fair value of the loyalty point incentive available to the user.

The Company also records payments received in advance of performance under an esports gaming services contract or event management or team services contract as deferred revenue.

***Business Combinations***

The Company accounts for business combinations using the acquisition method of accounting. The Company records the assets acquired, liabilities assumed and acquisition-related contingent consideration at fair value on the date of acquisition. The difference between the purchase price, including any contingent consideration, and the fair value of net assets acquired is recorded as goodwill. The Company may adjust the preliminary purchase price and purchase price allocation, as necessary, during the measurement period of up to one year after the acquisition closing date as it obtains more information as to facts and circumstances that impact the determination of fair value at the acquisition date. Any change in fair value of acquisition-related contingent consideration resulting from events after the acquisition date is recognized in earnings. Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred.

***Impairment of Goodwill and long-lived assets***

Goodwill represents the excess of fair value of consideration paid for an acquired entity over the fair value of the assets acquired and liabilities assumed in a business combination. Goodwill is not amortized but rather it is tested for impairment at the reporting unit level on an annual basis on April 1 of each fiscal year, or more often if events or changes in circumstances indicate that more likely than not the carrying amount of the asset may not be recoverable. A reporting unit represents an operating segment or a component of an operating segment. In accordance with ASC Topic 350 *Intangibles - Goodwill and Other*, our business is classified into four reporting units: iGaming Malta (Bethard and Lucky Dino), Argyll UK, EGL, and GGC.

In testing goodwill for impairment, we have the option to begin with a qualitative assessment, commonly referred to as "Step 0," to determine whether it is more likely than not that the fair value of a reporting unit containing goodwill is less than its carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as macroeconomic conditions, industry and market considerations, cost factors, entity-specific financial performance and other events, including changes in our management, strategy and primary user base. If we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, we then perform a quantitative goodwill impairment analysis by comparing the carrying amount to the fair value of the reporting unit. If it is determined that the fair value is less than its carrying amount, the excess of the goodwill carrying amount over the implied fair value is recognized as an impairment loss in accordance with Accounting Standards Update ("ASU") No. 2017-04, *Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment*. The Company utilizes a discounted cash flow analysis, referred to as an income approach, and uses internal and market multiples, to assess reasonableness of assumptions, to determine the estimated fair value of our reporting units. For the income approach, significant judgments and assumptions including anticipated revenue growth rates, discount rates, gross margins, operating expenses, working capital needs and capital expenditures are inherent in the fair value estimates, which are based on our operating and capital forecasts. As a result, actual results may differ from the estimates utilized in our income approach. The use of alternate judgments and/or assumptions could result in a fair value that differs from our estimate and could result in the recognition of additional impairment charges in the financial statements. As a test for reasonableness, the Company also considers the combined fair values of our reporting units to a reasonable market capitalization of the Company. The Company may elect not to perform the qualitative assessment for some or all reporting units and perform a quantitative impairment test.

Equipment and other long-lived assets, including finite lived intangibles, are evaluated for impairment periodically or when events and circumstances indicate that the carrying amount of an asset may not be recoverable. If an evaluation is required, an estimate of future undiscounted cash flows are determined through estimated disposition date of the asset. To the extent that estimated future undiscounted net cash flows attributable to the asset are less than the carrying amount, an impairment loss is recognized equal to the difference between the carrying value of such asset and its fair value, considering external market participant assumptions. An estimation of future cash flows requires significant judgment as the Company makes assumptions about future results and market conditions. Since the determination of future cash flows is an estimate of future performance, there may be impairments recognized in future periods in the event future cash flows do not meet expectations.

***Derivative financial instruments***

The Company evaluates its convertible notes, equity instruments and warrants, to determine if those contracts or embedded components of those contracts qualify as derivatives. The result of this accounting treatment is that the fair value of the embedded derivative is recorded at fair value each reporting period and recorded as a liability in the balance sheet. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statements of operations as other income or expense.

In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to a liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the balance sheet as current or non-current to correspond with its host instrument. The Company records the fair value of the remaining embedded derivative at each balance sheet date and records the change in the fair value of the remaining embedded derivative as other income or expense in the consolidated statements of operations.

**Off Balance Sheet Arrangements**

None.

 **CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS**

None.

**MANAGEMENT**

The names of our executive officers and directors and their age, title, and biography as of [●], 2023 are set forth below. Our officers and directors serve until their respective successors are elected and qualified.

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| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position(s)** |
| Alex Igelman | 56 | Chief Executive Officer |
| Michael Villani | 46 | Interim Chief Financial Officer (Principal Financial Officer)<br> (Principal Accounting Officer) |
| John Brackens | 42 | Chief Information Officer and Chief Technology Officer, Former Director |
| Lydia Roy | 50 | Group General Counsel and Compliance, Corporate Secretary |
| Jennifer Pace | 59 | Chief People Officer |
| Alan Alden | 61 | Director |
| Jan Jones Blackhurst | 73 | Director and Chair of the Board of Directors |
| Chul Woong Lim | 41 | Director |
| Damian Mathews | 50 | Director,<br> Former Chief Financial Officer (Principal Financial Officer)<br> (Principal Accounting Officer) (resigned December 31, 2022) and<br> Former Chief Operating Officer (resigned December 31, 2022) |

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The following noteworthy experience, qualifications, attributes and skills for each Board member, together with the biographical information for each person described below, led to our conclusion that the person should serve as a director in light of our business and structure:

*Alex Igelman*

Mr. Igelman has served as the Company's Chief Executive Officer since January 2023. He has more than 30 years of experience in the gaming industry. He is a gaming lawyer and the co-founder of FairP2P and Esports Capital Corp., entities which have been leaders in their respective sectors. During his career, Mr. Igelman worked across the gambling and gaming industry in a variety of senior leadership positions. From 2016 to 2019, Mr. Igelman served as CEO & Executive Chairman of Millennial Esports Corporation, an esports platform provider and from 2019, was Founder & Managing Director of Esports Capital Corp. advisory and investment Company. Mr. Igelman provides extensive knowledge of esports and related businesses to the Company and is well connected within esports and gaming.

*Jan Jones Blackhurst*

Ms. Jones Blackhurst has served as a director of the Company since May 2022. Ms. Jones Blackhurst has served as a director of Caesars Entertainment, Inc. (Nasdaq: CZR) since October 2019. Ms. Jones Blackhurst served as Executive Vice President, Public Policy and Corporate Responsibility of Caesars from May 2017 through September 2019. Ms. Jones Blackhurst also served as Executive Vice President of Communications and Government Relations of Caesars from November 2011 until May 2017 and as Senior Vice President of Communications and Government Relations of Caesars from November 1999 to November 2011. Ms. Jones Blackhurst has over 20 years of experience in the gaming industry and has played a key role in innovating responsible gaming programs that are now used throughout the industry. Ms. Jones Blackhurst serves as the Chairwoman of the Public Education Foundation and as Chief Executive-In-Residence of the UNLV International Gaming Institute. Ms. Jones Blackhurst became Executive Director, UNLV Black Fire Leadership Initiative in January 2021. Since February 2021, Ms. Jones Blackhurst has served as a director of Gaming & Hospitality Acquisition Corp. Prior to joining Caesars, Ms. Jones Blackhurst served two terms as Mayor of Las Vegas, from 1991 until 1999. Ms. Blackhurst was selected to serve as a director because of her extensive experience in the gaming industry and proven leadership abilities.

*Michael Villani*

Mr. Villani has served as the Company's Chief Financial Officer since January 2023. Mr. Villani joined the Company in February 2021 as its Financial Controller. Prior to joining the Company, Mr. Villani worked as a Director in the Deal Advisory practice of KPMG supporting clients with technical accounting, buy-side and sell-side transactions, initial public offerings (IPOs) and SEC reporting. Mr. Villani worked a total of 18 years at KPMG LLP, with 9 years in the Deal Advisory practice and 9 years in the audit practice. Mr. Villani was also previously employed as the Chief Financial Officer of a Geneva-based hedge fund and has held other senior accounting level roles at public companies. Mr. Villani is a CPA and is a graduate of Pace University, magna cum laude.

*John Brackens*

Mr. Brackens has been the Chief Information Officer and Chief Technology Officer of the Company since 2019. Mr. Brackens had been a member of the Board of Directors since September 2022. He resigned from the Board in October 2022. Mr. Brackens combines over 12 years of experience in information technology senior management following a four-year career leading customer experience teams. Previously, he had been involved in five organizations within the game industry holding positions including Chief Operating Officer, Treasurer, Foreign Director, and Network Operations Manager. From 2018 through January 2019, Mr. Brackens was the Operations Director for Carte Blanche Entertainment, Inc., an iGaming company. From 2016 to 2017, he was Chief Operating Officer for Sparkjumpers Pte Ltd., a company involved in video game development and eSports tournament events. From January 2014 to January 2016, he was Manager of Network Operations of Activision Blizzard – Demonware an entertainment company that focused on AAA game development. Mr. Brackens studied Electrical Engineering at Arizona State University. On September 26, 2019, Mr. Brackens was appointed Chief Technology Officer and Chief Information Officer of the Company. Mr. Brackens was selected to serve as a director because he provides valuable insights to the Board due to his position as Chief Information Officer and Chief Technology Officer.

*Lydia Roy*

Ms. Roy has been Group General Counsel and Compliance, Corporate Secretary for the Company since February 2022. Ms. Roy joined the Company in 2021 as Head of Legal, Esports. Prior to joining the Company, Ms. Roy served as senior counsel for Flutter Entertainment- The Stars Group Brand from 2017 to 2021, and several multinational corporations ranging from gaming, logistics and security. Ms. Roy received a bachelor's degree in Political Science and Sociology from the University of Ottawa. She received a J.D. and L.L.L from the University of Ottawa Law School. Ms. Roy is a member of the Law Society of Ontario in Canada and a member of the Massachusetts Bar. She is licensed to practice in Ontario Canada, Massachusetts and Florida as Authorized House Counsel Florida Bar.

*Jennifer Pace*

Ms. Pace has been the Chief People Officer of the Company since September 2022. Previously, Ms. Pace was the Senior Vice President of Human Resources and Administration since September 2021. Ms. Pace combines over two and a half years of experience in iGaming/gaming senior management following a 22-year career in the financial services sector. Ms. Pace was the Vice President of Payments and People Operations of the Company from April 2020 to September 2021 and the Head of Payments of the Company from January to April 2020. She was also the company secretary for Western Union Business Solutions from February to December 2018 and for Western Union Malta Holdings Limited and Western Union Malta Ltd from December 2017 to December 2018. From November 2014 to December 2018, she was a director of Western Union Business Solutions, Western Union Malta Holdings Limited and Western Union Malta Ltd. From 2011 through 2018, Ms. Pace was the country manager for Western Union Business Solutions, a financial services and B2B payments company. From 2009 to 2011, she was country manager Malta/Cyprus & Lebanon for Travelex Financial Services Ltd, a company involved in financial services and B2B Payments. From 1992 to 2000, she was a business development manager and FX Trader of Thomas Cook Financial Services Ltd, a financial services Business to Business and Business to Customer company that focused on foreign exchange. Ms. Pace is also currently a director of Esports Entertainment (Malta) Ltd, Prozone Ltd, BHGES PLC., all iGaming licensed companies. Ms. Pace holds a level 3 CISI Finance and Financial Management Services qualification, Level 3 and an MQF Level 7 (MA equivalent) in Advanced Employment Law.

*Alan Alden*

Mr. Alden has served as a director of the Company since October 2020. Mr. Alden has been a specialist in advising remote gaming companies located in Malta since 2000, when he advised the first remote gaming companies as the Senior Manager of Enterprise Risk Services at Deloitte & Touche (Malta). In 2006, Mr. Alden established Kyte Consultants Ltd, a company that specialized in the remote gaming and payment card sectors, to assist companies located in Malta. In 2009, Mr. Alden became a founding director in Contact Advisory Services Ltd, a licensed Company Service Provider that offers a complete service to its customers, from company incorporation, to licensing for gaming and financial institutions. Since 2010, Mr. Alden has served as the General Secretary of the Malta Remote Gaming Council. Mr. Alden is a Certified Information Systems Security Professional and a Certified Information Systems Auditor. Mr. Alden was also the founding President of the ISACA Malta Chapter between 2005 and 2008. In 2015, Mr. Alden became a Part Time Lecturer on IT Auditing at the University of Malta. Mr. Alden was selected to serve as a director because of his extensive experience in the gaming industry.

*Chul Woong Lim*

Mr. Lim has served as a director of the Company since October 2020. Since June 2018 Mr. Lim has been Director of Global Business for Loud Communications based in Seoul, South Korea. Between 2014 and 2018 Mr. Lim was the Secretary General of the International e-Sports Federation (IeSF) based in Seoul, South Korea where he was responsible for relations with 47 national federations, international sports authorities, and global partners, in addition to organizing and operating the eSports World Championship and other international esports tournaments. During 2010, Mr. Lim was Deputy Manager of Sports Marketing with FIRSONS Inc., a Seoul, South Korea based sports events marketing firm. Mr. Lim was one of our Directors between January 30, 2015 and October 26, 2016. Mr. Lim received a B.S. in Physical Education from Seoul National University. Mr. Lim was selected to serve as a director because of his extensive experience in the gaming industry.

*Damian Mathews*

Mr. Mathews joined as a Director in June 2020 and was the chair of the Audit Committee until he took on other roles at the Company in 2022. Mr. Mathews previously served as our Chief Financial Officer of the Company since April 2022 and added the role of Chief Operating Officer in June 2022 until his resignation from these positions on December 31, 2022. Mr. Mathews has been a member of the Board of Directors since June 2020 serving as Audit Committee Chair prior to his appointment as Chief Financial Officer. Mr. Mathews combines over 25 years of experience in senior finance positions within investment management, banking and accounting. Previously, he had been involved Auckland Real Estate Co. as Group Chief Operating Officer and with the Qatar and Abu Dhabi Investment Company (a sovereign wealth fund owned investment company) as Chief Financial Officer from 2014 to 2020. From 2012 to 2014 he was a Director of his own consultancy business, NZ Pacific Investments, in New Zealand. From 2009 to 2012 he held senior management positions including General Manager Finance (New Zealand); Head of Finance and Operations Americas (United States); and Head of Change Management (Australia) at Commonwealth Bank of Australia Group. From 2007 to 2008 Damian was a Director in Product Control at ABN Amro Bank in London. From 2002 to 2006 he held various senior financial controller positions at Royal Bank of Scotland Group in London. From 1998 to 2002 he was an Assistant Vice President at Credit Suisse First Boston investment bank in London and the Bahamas. From 1994 to 1998, he was an Assistant Manager at KPMG accountants in London. He has a joint honors undergraduate degree in Economics and Politics from the University of Bristol in the United Kingdom and is a fellow of the Institute of Chartered Accountants in England and Wales. Mr. Matthews was selected to serve as a director in 2020 due to his extensive financial experience and he will provide valuable operational and strategic insights to the Board's decision-making process from his term as Chief Financial Officer of the Company.

Ms. Jones Blackhurst and Messrs. Alden, and Lim, are independent directors as that term is defined in Section 5605(a)(2) of the Nasdaq rules.

**Family Relationships**

There are no family relationships between any of our directors or executive officers.

**Board Composition and Director Independence**

Our Common Stock and warrants are listed on Nasdaq. Under the rules of Nasdaq, "independent" directors must make up a majority of a listed company's Board. In addition, applicable Nasdaq Listing Rules require that, subject to specified exceptions, each member of a listed company's audit and compensation committees be independent within the meaning of the applicable Nasdaq Listing Rules. Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act.

The Company defines "independent" as that term is defined in Rule 5605(a)(2) of the Nasdaq Listing Rules.

In making the determination of whether a member of the Board is independent, our Board considers, among other things, transactions and relationships between each director and his immediate family and the Company, including those reported under the caption "Related Party Transactions." The purpose of this review is to determine whether any such relationships or transactions are material and, therefore, inconsistent with a determination that the directors are independent. On the basis of such review and its understanding of such relationships and transactions, our Board affirmatively determined that Alan Alden, Jan Jones Blackhurst, and Chul Woong Lim are qualified as independent and do not have any material relationships with us that might interfere with the exercise of independent judgment.

**Disclosure of Commission Position on Indemnification of Securities Act Liabilities**

Our directors and officers are indemnified as provided by Nevada corporate law and our Amended and Restated Bylaws. We have agreed to indemnify each of our directors and certain officers against certain liabilities, including liabilities under the Securities Act. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the provisions described above, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

**EXECUTIVE COMPENSATION**

**Summary Compensation Table**

The following table summarizes information concerning the compensation awarded to, earned by, or paid to, our CEO (Principal Executive Officer or PEO) and our two most highly compensated executive officers other than the Principal Executive Officer during fiscal years 2022 and 2021 (collectively, the "Named Executive Officers") who served in such capacities. We have included the former CEO, former Chief Financial Officer and the former Chief Operating Officer who departed from their positions. We included Damian Mathews, former Chief Financial Officer and Chief Operating Officer, and his compensation for the period of employment. We included John Brackens, the Chief Information Officer and Chief Technology Officer, as he was the next highly compensated after the resignations of the Chief Financial Officer and the Chief Operating Officer. The table does not include Alex Igelman, our CEO, who was appointed on December 22, 2022, or Michael Villani, who was promoted to Interim CFO on January 6, 2023 in addition to his position as Controller.

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| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| **Name and Principal Position** | **Year** | **Salary** | **Bonus** | **Stock**<br> **Awards<sup>(1)</sup>** | **Option**<br> **Awards<sup>(1)</sup>** | **Other**<br> **Annual**<br> **Compensation** | **All Other**<br> **Compensation** | **Total** |
| Grant Johnson, | 2022 | $300000 | – |  | 164322 | – | 14800 | $479122 |
| Former Chief Executive Officer and President<sup>(2)</sup> | 2021 | $300000 | – | 92000 | 192000 | – | 14800 | $598800 |
| Damian Mathews, | 2022 | $68811 | – | 142400 | 160054 | – | 11500 | $382765 |
| Former Chief Financial Officer and Former Chief Operating Officer<sup>(3)</sup> | 2021 | $— | – |  | 64000 | – | 20000 | $84000 |
| John Brackens, | 2022 | $200000 | – |  | 164322 | – |  | $364322 |
| Chief Information Officer and Chief Technology Officer <sup>(4)</sup> | 2021 | $207400 | – | 52794 | 128000 | – |  | $388194 |
| Stuart Tilly, | 2022 | $293054 | – |  | 137646 | – |  | $430700 |
| Former Chief Legal Counsel and Chief Operating Officer <sup>(5)</sup> | 2021 | $320013 | – | 23000 | 32000 | – |  | $375013 |
| Daniel Marks, | 2022 | $162000 | – |  |  | – |  | $162000 |
| Former Chief Financial Officer <sup>(6)</sup> | 2021 | $216000 | – | 23000 | 48000 | – |  | $287000 |

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(1) The fair value of options granted computed in accordance with ASC 718 on the date of grant.

(2) Annual salary of $300,000. During the year ended June 30, 2022, Mr.
 Johnson, the former Chief Executive Officer was issued 30,800 stock options at $5.34 fair value grant price. All other compensation
 includes $4,800 for office rent reimbursement and $10,000 for car allowance. During the year ended June 30, 2021, Mr. Johnson was
 issued 20,000 shares of Common Stock at $4.60 grant price and 60,000 stock options at $3.20 fair value grant price. Mr. Johnson was
 terminated for cause by the Board from his position as Chief Executive Officer on December 3, 2022. Mr. Johnson
 resigned from the Board on December 23, 2022.

(3) Annual salary of $300,000. During the year ended June 30, 2022, Mr.
 Mathews was issued 200,000 shares of Common Stock at $0.71 grant price. As part of his role as non-executive director,
 Mr. Mathews received director fees of $11,500 and was issued 30,000 stock options at $5.34 fair value grant price during the year
 ended 2022 and received director fees of $20,000 and 20,000 stock options at $3.20 fair value grant price during the year ended 2021.
 Mr. Mathews resigned from his positions as CFO and COO of the Company on December 31, 2022. Mr. Mathews will continue on in his
 role as a Director of the Company.

(4) Annual salary of approximately $200,000. During the year ended June
 30, 2022, Mr. Brackens was issued 30,800 stock options at $5.34 fair value grant price. During the year ended June 30, 2021, Mr.
 Brackens was issued 300 shares, 7,500 shares and 2,367 shares of Common Stock at $4.25, $4.60 and $7.19 grant price, respectively.
 During the year ended June 30, 2021 Mr. Brackens was also issued 40,000 stock options at $3.20 fair value grant price.

(5) Annual salary of approximately $320,000. Mr. Stuart Tilly was appointed
 as the Company's Chief Legal Counsel on June 15, 2020 and later promoted to Chief Operating Officer on January 28, 2022.
 Mr. Tilly resigned from his role as Chief Operating Officer on May 31, 2022 but remained as an advisor to the Company. Mr. Tilly
 was compensated through a legal consultancy agreement that requires payments of £18,000 ($21,920 translated using the exchange
 rate in effect at June 30, 2022) per month to his law firm, and he also received $500 per month through an employment agreement
 as Company Secretary and Legal Advisor. During the year ended June 30, 2022, Mr. Tilly was issued 25,800 stock options at $5.34 fair
 value grant price. During the year ended June 30, 2021, Mr. Tilly was issued 5,000 shares of Common Stock at $4.60 grant price, and
 10,000 stock options at $3.20 fair value grant price. Mr. Tilly resigned from his positions as Chief Legal Counsel and Chief Operating
 Officer of the Company on May 31, 2022.

(6) Annual salary of $216,000. Mr. Daniel Marks was appointed as the Company's
 Chief Financial Officer on June 15, 2020 and resigned on March 31, 2022. All stock options granted and outstanding, including the
 30,800 granted during the year ended June 30, 2022 were forfeited. During the year ended June 30, 2021 the Chief Financial Officer
 was issued 5,000 shares of Common Stock at $4.60 grant price, and 15,000 stock options at $3.20 fair value grant price. Mr. Marks
 resigned from his position as Chief Financial Officer of the Company on March 11, 2022.

**Employment Agreements**

Alex Igelman

On December 22, 2022, in connection with Mr. Igelman's appointment as CEO, Mr. Igelman and the Company entered into an employment agreement, which provides for a base salary of $300,000 and the grant of common stock and stock options. These stock awards are being granted as inducement equity awards outside the Company's Esports Entertainment Group, Inc. 2020 Equity Incentive Plan in accordance with Nasdaq Listing Rule 5635(c)(4). Pursuant to the terms of the Agreement, subject to the commencement of his employment, the Company will grant Mr. Igelman an award of 2,500,000 shares of common stock and an award of 2,500,000 time-based stock options. Mr. Igelman's shares of common stock may not be sold or transferred until the six-month anniversary of the date of grant. Mr. Igelman's stock options will vest in equal quarterly installments over a one-year period subject to his continued employment with the Company on the applicable vesting dates. The stock awards are subject to the terms of an award agreement outlining the specific terms of the stock awards. Mr. Igelman may also participate in the executive stock option plan consistent with other executive officers. Mr. Igelman is eligible to earn an annual bonus of 50% of his base salary, subject to satisfaction of goals and objectives to be set each year by the Board.

The employment agreement is at-will and either the Company or Mr. Igelman may terminate the employment at any time for any reason or no reason with 90 days advanced written notice. Upon termination of Mr. Igelman's employment because of disability, the Company shall pay or provide Mr. Igelman, subject to continued compliance with applicable restrictive covenants: (i) any unpaid base fee and any accrued vacation through the date of termination; (ii) any unpaid annual bonus accrued with respect to the fiscal year ending on or preceding the date of termination; (iii) reimbursement for any unreimbursed expenses properly incurred through the date of termination; and (iv) any accrued benefits. Upon the termination of Mr. Igelman's employment because of death, Mr. Igelman's estate shall be entitled to any accrued benefits. Upon the termination of Mr. Igelman's employment by the Company for cause or by either party in connection with a failure to renew the employment agreement, subject to continued compliance with applicable restrictive covenants, the Company shall pay Mr. Igelman any accrued benefits.

There are no family relationships between Mr. Igelman and any of the Company's other directors or executive officers, and other than disclosed above, Mr. Igelman is not a party to any transaction, or any proposed transaction, required to be disclosed pursuant to Item 404(a) of Regulation S-K.

John Brackens

On May 9, 2019, the Company entered into an employment agreement with Mr. John Brackens to serve as the Company's Chief Information Officer and Chief Technology Officer with a salary of $120,000 per annum. On September 20, 2019, the Company entered in a new employment agreement with Mr. Brackens to update Mr. Brackens position with the Company as its Chief Technology Officer. Under this amended agreement, Mr. Brackens was to receive an initial base salary of $120,000 per annum with his salary increased to $144,000 per annum upon the Company's completion of financing in excess of $5,000,000. On May 1, 2020, the Company further amended the employment agreement with Mr. Brackens to update Mr. Bracken's salary to $144,000 per annum. On February 22, 2021, the employment agreement with Mr. Brackens was amended further to increase Mr. Bracken's salary effective from March 1, 2021 to approximately $200,000 payable in U.S. dollars and Euro.

The employment agreement with Mr. Brackens is for one year and is automatically extended for an additional one year term unless the Company or Mr. Brackens provides written notice within 60 days' notice prior to the end of the current employment term. Mr. Brackens is eligible to earn an annual employee stock option bonus in such amount, if any, as determined in the sole discretion of the Board of Directors. Mr. Brackens participates in the executive stock option plan consistent with other executive officers. The employment agreement with Mr. Brackens may be terminated with or without cause. Upon termination Mr. Brackens' employment because of disability, the Company shall pay or provide Mr. Brackens (i) any unpaid base fee and any accrued vacation through the date of termination; (ii) any unpaid annual bonus accrued with respect to the fiscal year ending on or preceding the date of termination; (iii) reimbursement for any unreimbursed expenses properly incurred through the date of termination; and (iv) any accrued benefits. Upon the termination of Mr. Brackens' employment because of death, Mr. Brackens' estate shall be entitled to any accrued benefits. Upon the termination Mr. Brackens' employment by the Company for cause or by either party in connection with a failure to renew the employment agreement, the Company shall pay Mr. Brackens any accrued benefits.

Grant Johnson

Mr. Johnson was terminated for cause by the Board on December 3, 2022. Prior to his termination, on June 1, 2017, the Company had entered into an employment agreement with Mr. Johnson to serve as our Chief Executive Officer, President, Principal Financial and Accounting Officer. The agreement provided for an annual salary of $150,000. On September 29, 2020, the Company entered into an amended and restated employment agreement with Mr. Johnson to serve as our Chief Executive Officer. The agreement included that the Company would employ Mr. Johnson for the period beginning retroactively on May 1, 2020 and ending on January 31, 2025. The term would have been automatically renewed for successive consecutive one (1) year periods thereafter unless either party sent written notice to the other party, not more than 270 days and not less than 180 days before the end of the then-existing term of employment, of such party's desire to terminate the employment agreement at the end of the then-existing term, in which case the employment agreement would have terminated at the end of the then-existing term.

The employment agreement provided for (1) an annual base salary of $300,000, and (2) potential cash bonus up to 150% of the base salary determined by the relationship between our annual performance and an annual target performance set each year by mutual agreement between the Board.

Mr. Johnson participated in the executive stock option plan consistent with other executive level officers. In addition, Mr. Johnson's agreement included that he could receive the following: (1) 100,000 shares of our Common Stock for each stock or asset acquisition consummated during the term of his employment that increases the gross revenues of the Company by $10,000,000 or more, as determined by our auditors and the Board, (2) 200,000 shares of our Common Stock if the Company reached positive cash flow EBIDTA, as determined by our auditors and the Board, (3) 200,000 shares of Common Stock if the market capitalization of the Company exceeded $500,000,000 for a period of 30 consecutive trading days, (4) 200,000 shares of Common Stock if the market capitalization of the Company exceeded $1,000,000,000 for a period of 30 consecutive trading days, (5) 200,000 shares of Common Stock if the market capitalization of the Company exceeded $1,500,000,000 for a period of 30 consecutive trading days, and (6) an additional 100,000 shares of Common Stock for each additional $100,000,000 increase in market capitalization thereafter, provided that such increase was sustained for a period of 30 consecutive trading days. The above was subject to Board approval.

Mr. Johnson was entitled to receive various employee benefits generally made available to other executive level officers and senior managers of the Company. If the Company had to terminate Mr. Johnson's employment without cause, Mr. Johnson would have been entitled to receive all compensation earned but unpaid through the date of termination and a severance payment equal to two (2) years' worth of his then-existing base salary and previous years' bonus.

Damian Mathews

Mr. Mathews resigned from his roles as Chief Executive Officer and Chief Operating Officer on December 31, 2022. Prior to his resignation, on April 2, 2022, the Company entered into a consultancy agreement and an employment agreement, to retain the services of Mr. Mathews to serve as the Company's Chief Financial Officer, and in June 2022 the agreement was amended as he was appointed as Chief Operating Officer in addition to his role as Chief Financial Officer. Mr. Mathews salary was approximately $300,000 per annum. The Company remitted monthly payments to Mr. Mathews of NZD 36,995 ($23,524 translated using the exchange rate in effect at June 30, 2022) under the consultancy agreement and $500 per month under the employment agreement. In connection with this appointment the Company provided a one-time issuance of 200,000 shares of Common Stock to Mr. Mathews.

The employment agreement with Mr. Mathews was for one year and would have automatically extended for an additional one year term unless the Company or Mr. Mathews provided written notice within 60 days notice prior to the end of the current employment term. Mr. Mathews was eligible to earn an annual employee stock option bonus in such amount, if any, as determined in the sole discretion of the Board of Directors. Mr. Mathews was eligible to participate in the executive stock option plan consistent with other executive level officers. The employment agreement with Mr. Mathews could be terminated with or without cause. Upon termination of Mr. Mathews' employment because of disability, the Company would have paid or provided Mr. Mathews (1) any unpaid base fee and any accrued vacation through the date of termination; (2) any unpaid annual bonus accrued with respect to the fiscal year ending on or preceding the date of termination; (3) reimbursement for any unreimbursed expenses properly incurred through the date of termination; and (4) any accrued benefits. Upon the termination of Mr. Mathews' employment because of death, Mr. Mathews' estate would have been entitled to any accrued benefits. Upon the termination Mr. Mathews' employment by the Company for cause or by either party in connection with a failure to renew the employment agreement, the Company would have had to pay Mr. Mathews any accrued benefits.

Daniel Marks

Mr. Marks resigned from his executive roles on December 3, 2022. Prior to his resignation, on June 11, 2020, the Company entered into an engagement agreement with Mr. Marks. The engagement agreement was for a term of one year and was automatically extended for additional terms of successive one-year periods unless the Company or Mr. Marks gives at least 30 days written notice prior to the expiration of the term. Mr. Marks received a base salary of $18,000 per month. Mr. Marks was eligible to earn an annual employee stock option bonus in such amount, if any, as determined in the sole discretion of the Board. The engagement agreement could be terminated with or without cause. The Company could terminate Mr. Marks without cause at any time during the first ninety (90) days of the agreement. Upon termination of Mr. Marks because of disability, the Company would have paid or provided to Mr. Marks (1) any unpaid salary and any accrued vacation through the date of termination; (2) any unpaid bonus accrued with respect to the fiscal year ending on or preceding the date of termination; (3) reimbursement for any unreimbursed expenses properly incurred through the date of termination; and (4) all other payments or benefits to which he may have been entitled under the terms of any applicable employee benefit plan, program or arrangement. Mr. Marks was eligible to participate in all of the Company's benefit programs.

Stuart Tilly

Mr. Tilly resigned from his executive roles on December 3, 2022. Prior to his resignation, on June 15, 2020, the Company had entered into an employment agreement and a consultancy agreement with Mr. Tilly, to serve as the Chief Legal Counsel (and subsequently Chief Operating Officer). The consultancy agreement with Mr. Tilly was through the legal consulting firm Rivington Law, whereby Mr. Tilly provided additional legal and other professional services to the Company. Mr. Tilly received $500 per month and £18,000 ($21,920 translated using the exchange rate in effect at June 30, 2022) per month, pursuant to the employment agreement and the consultancy agreement, respectively.

In his roles, Mr. Tilly was entitled to discretionary cash bonuses as determined from time to time by the Board or Compensation Committee as well as participation in any executive stock option plan consistent with other executive level officers. Either party could terminate the engagement agreement upon 60 days written notice.

The Company or Mr. Tilly could terminate the consultancy agreement upon six months written notice. Under the consultancy agreement, the Company could, at is sole discretion, terminate the agreement immediately by paying all amounts that otherwise would have been due and owing during the notice period for termination. On the date of termination, for any reason whatsoever, Mr. Tilly was only be entitled to any outstanding fees or consideration earned and owed though the date of such termination.

After resigning from his executive roles, Mr. Tilly was paid as an advisor to the Company with an annual fee of $60,000.

**Outstanding Equity Awards at Fiscal Year-End**

The following table summarizes the outstanding equity award holdings held by our current Named Executive Officers and directors as of June 30, 2022.

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| | | | | |
|:---|:---|:---|:---|:---|
| **Name** | **Grant date** | **Shares<br> issuable<br> upon exercise <br> of options** | **Option**<br> **exercise**<br> **price ($)** | **Option**<br> **expiration**<br> **date** |
| Alan Alden, Director (1) | October 8, 2020 | 20000 | $4.82 | January 7, 2026 |
|  | October 1, 2021 | 30000 | $6.71 | October 1, 2026 |
| Chul Wong Lim, Director (2) | October 8, 2020 | 20000 | $4.82 | January 7, 2026 |
|  | October 1, 2021 | 30000 | $6.71 | October 1, 2026 |
| Grant Johnson, former Chief Executive Officer (3) | October 8, 2020 | 60000 | $4.82 | January 7, 2026 |
|  | October 1, 2021 | 30800 | $6.71 | October 1, 2026 |
| Damian Mathews, Director, Former Chief Financial Officer and Former Chief Operating Officer (4) | October 8, 2020 | 20000 | $4.82 | January 7, 2026 |
|  | October 1, 2021 | 30000 | $6.71 | October 1, 2026 |
| John Brackens, Chief Information Officer and Chief Technology Officer (5) | October 8, 2020 | 40000 | $4.82 | January 7, 2026 |
|  | October 1, 2021 | 30800 | $6.71 | October 1, 2026 |

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(1) Mr.
 Alden was appointed as a Non-Executive Director of Esports Entertainment Group, Inc. and Chair of the Compensation Committee from
 October 1, 2020.

(2) Mr.
 Lim was appointed as a Non-Executive Director of Esports Entertainment Group, Inc. and a member of the Compensation Committee from
 October 1, 2020.

(3) Mr.
 Johnson was appointed as an Executive Director of Esports Entertainment Group, Inc. in 2013 and a member of the Compensation Committee
 from October 1, 2020. Mr. Johnson was terminated for cause by the Board from his position as Chief Executive Officer
 on December 3, 2022. Mr. Johnson resigned from the Board on December 23, 2022. Mr. Johnson's 90,800 unexercised options
 expired on December 17, 2022.

(4) Mr.
 Mathews was appointed as a Non-Executive Director of Esports Entertainment Group, Inc. and Chair of the Audit Committee from October
 1, 2020. Mr. Mathews resigned from his role as Non-Executive Director on appointment as Chief Financial Officer on April 2, 2022
 and as an Executive Director. Mr. Mathews also took on the role of Chief Operating Officer on June 1, 2022. Mr. Mathews resigned
 from his roles as Chief Financial Officer and Chief Operating Officer on December 31, 2022. Mr. Mathews will continue on in his role
 as a Director of the Company.

(5) Mr.
 Brackens was appointed Chief Information Officer and Chief Technology Officer from October 1, 2020. Mr. Brackens also took on the
 role of a member of the Board on September 1, 2022. Mr. Brackens resigned from the Board on October 31, 2022.

**Securities Authorized for Issuance Under Equity Compensation Plans**

*Stock Incentive Plans*

On September 10, 2020, the Company's Board adopted the 2020 Equity and Incentive Plan (the "2020 Plan") that provides for the issuance of incentive and non-qualified stock options, restricted stock, restricted stock units and stock appreciation rights to officers, employees, directors, consultants, and other key persons. Under the 2020 Plan, the maximum number of shares of Common Stock authorized for issuance was 1,500,000 shares. Each year on January 1, for a period of up to nine years, the maximum number of shares authorized for issuance under the 2020 Plan is automatically increased by 233,968 shares. At June 30, 2022, there was a maximum of 1,967,936 shares of Common Stock authorized for issuance under the 2020 Plan. There were no additional equity awards eligible for issuance from the 2017 Stock Incentive Plan that had been adopted by the Company on August 1, 2017. The outstanding stock options granted under the 2017 Plan were transferred to the 2020 Plan. As of June 30, 2022, there were 857,410 shares of Common Stock available for future issuance under the 2020 Plan.

---

| | | | |
|:---|:---|:---|:---|
| **Plan category** | **Number of securities to be issued upon exercise of outstanding options** | **Weighted-average exercise price of outstanding options** | **Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))** |
|  | (a) | (b) | (c) |
| **Equity compensation plans approved by security holders** | 1110526 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.29 | 857410 |
| **Equity compensation plans not approved by security holders** |  | $- |  |
| **Total** | 1110526 | $6.29 | 857410 |

---

*Incentive Stock Options*

All of our employees are eligible to be granted Incentive Stock Options pursuant to the 2020 Plan as may be determined by our Board which administers the 2020 Plan.

Options granted pursuant to the 2020 Plan terminate at such time as may be specified when the option is granted.

The total fair market value of the shares of Common Stock (determined at the time of the grant of the option) for which any employee may be granted options which are first exercisable in any calendar year may not exceed $100,000.

In the discretion of the Board, options granted pursuant to the 2020 Plan may include installment exercise terms for any option such that the option becomes fully exercisable in a series of cumulating portions. The Board may also accelerate the date upon which any option (or any part of any option) is first exercisable. However, no option, or any portion thereof may be exercisable until one year following the date of grant. In no event shall an option granted to an employee then owning more than 10% of our Common Stock be exercisable by its terms after the expiration of five years from the date of grant, nor shall any other option granted pursuant to 2020 Plan be exercisable by its terms after the expiration of ten years from the date of grant.

*Non-Qualified Stock Options*

Our employees, directors and officers, and consultants or advisors are eligible to be granted Non-Qualified Stock Options pursuant to 2020 Plan as may be determined by our Board which administers the 2020 Plan, provided however that bona fide services must be rendered by such consultants or advisors and such services must not be in connection with a capital-raising transaction or promoting our Common Stock.

Options granted pursuant to 2020 Plan terminate at such time as may be specified when the option is granted.

In the discretion of the Board options granted pursuant to the Plan may include instalment exercise terms for any option such that the option becomes fully exercisable in a series of cumulating portions. The Board of Directors may also accelerate the date upon which any option (or any part of any option) is first exercisable. In no event shall an option be exercisable by its terms after the expiration of ten years from the date of grant.

*<u>Stock Bonuses</u>*

Our employees, directors and officers, and consultants or advisors are eligible to receive a grant of our shares, provided however that bona fide services must be rendered by such consultants or advisors and such services must not be in connection with a capital-raising transaction or promoting our Common Stock. The grant of the shares rests entirely with our Board which administers the 2020 Plan. It is also left to the Board to decide the type of vesting and transfer restrictions which will be placed on the shares.

*<u>Employee Pension, Profit Sharing or other Retirement Plan</u>*

We do not have a defined benefit, pension plan, profit sharing or other retirement plan, although we may adopt one or more of such plans in the future.

**<u>Compensation of Directors</u>**

The table below shows the compensation paid to our non-executive directors during the years ended June 30, 2022 and 2021.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Name** | **Year** | **Fees**<br> **Earned or<br> Paid in Cash** | **Stock<br> Awards<sup>(1)</sup>** | **Option<br> Awards<sup>(2)</sup>** | **Total** |
| Chul Woong Lim (3) | 2022 | $10000 | $– $| 133378 | $143378 |
|  | 2021 | $20000 | $– $| 64079 | $84079 |
| Alan Alden (4) | 2022 | $20000 | $– $| 133378 | $153378 |
|  | 2021 | $20000 | $– $| 64079 | $84079 |
| Warwick Bartlett (5) | 2022 | $8548 | $– $| 106703 | $115251 |
|  | 2021 | $20000 | $– $| 64079 | $84079 |
| Damian Mathews (6) | 2022 | $11500 | $– $| 133378 | $144878 |
|  | 2021 | $20000 | $– $| 64079 | $84079 |
| Mark Nielsen (7) | 2022 | $5000 | $– $| 133378 | $138378 |
|  | 2021 | $— | $– $|  | $— |
| Jan Jones Blackhurst (8) | 2022 | $15000 | $– $|  | $15000 |
|  | 2021 | $— | $– $|  | $— |
| Kaitesi Munroe (9) | 2022 | $5000 | $– $|  | $5000 |
|  | 2021 | $— | $– $|  | $— |

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&nbsp;&nbsp;&nbsp;&nbsp;(1) The fair value of stock issued for services computed in accordance with ASC 718 on the date of grant.

(2) The fair value of options granted computed in accordance with ASC 718 on the date of grant.

(3) Mr. Lim was appointed as a Non-Executive Director of Esports Entertainment
 Group, Inc. and a member of the Compensation Committee as from October 1, 2020. Mr. Lim was appointed to the Audit Committee effective
 May 3, 2022. Mr. Lim had no stock awards and 50,000 option awards outstanding as of June 30, 2022.

(4) Mr. Alden was appointed as a Non-Executive Director of Esports Entertainment
 Group, Inc. as from October 1, 2020. Mr. Alden was appointed to the Nominating and Governance Committee and as Chair of the Audit
 Committee on June 1, 2022. Mr. Alden had no stock awards and 50,000 option awards outstanding as of June 30, 2022.

(5) Mr. Bartlett was appointed as a Non-Executive Director of Esports Entertainment
 Group, Inc. and Chair of the Governance Committee as from October 1, 2020. Mr. Bartlett resigned from his position as a Non-Executive
 Director of the Company on March 4, 2022. Mr. Bartlett had no stock awards and no option awards outstanding as of June 30, 2022.

(6) Mr. Mathews was appointed as a Non-Executive Director of Esports Entertainment
 Group, Inc. and Chair of the Audit Committee as from October 1, 2020. Mr. Mathews resigned from his role as Non-Executive Director
 on appointment as Chief Financial Officer on April 2, 2022 and as an Executive Director. Mr. Mathews also took on the role of Chief
 Operating Officer on June 1, 2022. Mr. Mathews resigned from his roles as Chief Financial Officer and Chief Operating Officer on
 December 31, 2022. Mr. Mathews will continue on in his role as a Director of the Company. Mr. Mathews had no stock awards and
 45,800 option awards outstanding as of June 30, 2022.

(7) Mr. Nielsen was appointed as a Non-Executive Director of Esports Entertainment
 Group, Inc. and the Audit Committee as from October 21, 2021. Mr. Nielsen resigned from his position as a Non-Executive Director
 of the Company on June 15, 2022. Mr. Nielsen had no stock awards and no option awards outstanding as of June 30, 2022.

(8) Ms. Jones Blackhurst was appointed as a Non-Executive Director of Esports
 Entertainment Group, Inc. from May 3, 2022. Ms. Jones Blackhurst was appointed to the Audit committee effective May 3, 2022, as Chair
 of the Compensation Committee and as Chair of the Nominating and Governance committee effective May 25, 2022. Ms. Jones Blackhurst
 was appointed as Chair of the Board of Directors effective December 3, 2022. Ms. Jones Blackhurst had no stock awards and no option
 awards outstanding as of June 30, 2022.

(9) Ms. Munroe was appointed as a Non-Executive Director of Esports Entertainment
 Group, Inc from May 17, 2022. Ms. Munroe was appointed to the Compensation Committee, Nominating and Governance Committee effective
 June 1, 2022. Ms. Munroe resigned from her position as a Non-Executive Director of the Company on October 17, 2022. Ms. Munroe
 had no stock awards and no option awards outstanding as of June 30, 2022.

**SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**

The following table sets forth certain information regarding our voting shares beneficially owned as of December 31, 2022 and is based on 81,270,944 shares of Common Stock issued and outstanding, for (i) each stockholder known to be the beneficial owner of 5% or more of our outstanding shares of Common Stock, (ii) each named executive officer and director, and (iii) all executive officers and directors as a group. A person is considered to beneficially own any shares: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days through an exercise of stock options or warrants. Unless otherwise indicated, voting and investment power relating to the shares shown in the table for our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the owner's spouse or children.

For purposes of this table, a person or group of persons is deemed to have "beneficial ownership" of any shares of Common Stock that such person has the right to acquire within 60 days of December 31, 2022. For purposes of computing the percentage of outstanding shares of our Common Stock held by each person or group of persons, any shares that such person or persons has the right to acquire within 60 days of December 31, 2022, is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial ownership. Unless otherwise indicated, each of the stockholders named in the table below, or his or her family members, has sole voting and investment power with respect to such shares of our Common Stock. Except as otherwise indicated, the address of each of the stockholders listed below is: Block 6, Triq Paceville, St. Julians, Malta, STJ 3109.

The following shows the stock ownership of our named executive officers, directors, and any persons known to us who owns more than 5% of our Common Stock as of December 31, 2022.

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| | | | |
|:---|:---|:---|:---|
| **Name and Address of Beneficial Owner** |  | **Number** | **Percent** |
| Damian Mathews<br> 69 De Luen Avenue Tindalls Beach, Whangaparaoa Auckland 0930 | (2) | 258000 | \* |
| John Brackens<br> The Terraces, Triq is-Simar, Apt.7A, Xemxija St Paul's Bay, Malta SPB9026 | (3) | 89092 | \* |
| Alan Alden<br> 202, Yucca, Swieqi Road Swieqi, SWQ 3454, Malta | (4) | 54762 | \* |
| Jan Jones Blackhurst<br> 100 West Liberty Street, 12<sup>th</sup> Floor Reno, NV, 89501 | (5) |  | \* |
| Chul Woong Lim<br> 204-804 Susaek Rd. 100 Seodaemun-gu Seoul, Korea | (6) | 70780 | \* |
| Former Named Executive Officers | (7) | 3580310 | 4.40% |
| **All Named Executive Officers and Directors as a group** |  | **4052944** | **4.97%** |

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\* less than 1%

&nbsp;&nbsp;&nbsp;&nbsp;(1) The
 shares of Common Stock are deemed to be beneficially owned by Ayrton Capital LLC, Alto Opportunity Master Fund, SPC - Segregated
 Master Portfolio B, and Waqas Khatri. The information in this footnote is based on Schedule 13G filed by the beneficial owners on
 December 22, 2022.

(2) Includes
 208,000 shares of common stock and 50,000 options to purchase shares of common stock currently exercisable.

(3) Includes
 18,292 shares of common stock and 70,800 options to purchase shares of common stock currently exercisable.

(4) Includes
 4,762 shares of common stock and 50,000 options to purchase shares of common stock currently exercisable.

(5) No
 current holdings.

(6) Includes
 20,780 shares of common stock and 50,000 options to purchase shares of common stock currently exercisable.

(7) Includes 3,403,334 shares of common stock for the former
 Chief Executive Officer. The Chief Executive Officer had 90,800 unexercised options that expired on December 17, 2022 and are not
 included in the total. Also, includes 70,588 shares of common stock for the former Chief Financial Officer and 70,588 shares of common
 stock and 35,800 options to purchase shares of common stock currently exercisable for the former Chief Operating Officer, based on
 the most recently available information to the Company.

**CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**

Our Company's policy with regard to related party transactions is for the Audit Committee of the Board of Directors is to approve any material transactions involving our directors, executive officers or holders of more than 5% of our outstanding capital stock.

*Three months ended September 30, 2022 and 2021*

The Company reimbursed the former CEO for office rent and related expenses. The Company incurred charges owed to the former CEO for office expense reimbursement of $1,200 for the three months ended September 30, 2022 and 2021. As of September 30, 2022 and 2021, there were no amounts payable to the CEO. The former CEO was terminated for cause by the Board from his position as CEO on December 3, 2022. The former CEO resigned from the Board on December 23, 2022.

The Company retained the services of its former CFO and COO through a consultancy agreement dated April 2, 2022 and an employment agreement dated April 2, 2022. The Company remitted monthly payments to its former CFO and COO of NZD 36,995 ($20,854 translated using the exchange rate in effect at September 30, 2022) under the consultancy agreement and $500 per month under the employment agreement. The former CFO and COO resigned from his roles on December 31, 2022. He will continue on in his role as a Director of the Company.

On May 4, 2017, the Company entered into a services agreement and a referral agreement with Contact Advisory Services Ltd., an entity that is partly owned by a member of the Board of Directors. The Company incurred general and administrative expenses of $2,935 and $11,109 for three months ended September 30, 2022 and 2021, respectively, in accordance with these agreements. As of September 30, 2022 and 2021, there were $2,935 and $0 amounts payable to Contact Advisory Services Ltd, respectively.

The Company had retained services from a former member of its Board who remained as an advisor to the Company with an annual fee of $60,000. The member was previously retained through a consultancy agreement dated August 1, 2020 and an employment agreement dated June 15, 2020. The consultancy agreement required payments of £18,000 ($20,028 translated using the exchange rate in effect at September 30, 2022) per month to the firm that is controlled by this member of the Board. The individual also received payroll of $500 per month through the employment agreement as COO. The member resigned from the Board of Directors and from his role as COO on May 31, 2022 and the consultancy agreement and the employment agreement were terminated.

During the three months ended September 30, 2021, the Company engaged in transactions with Tilt, LLC a game center operator controlled by the head of GGC. This included net sales to Tilt, LLC in the amount of $153,814 for game center equipment, and amounts paid to Tilt, LLC of $11,200 for equipment leased, $3,526 for services and $9,349 for cryptocurrency mining. The individual was no longer employed by the Company during the three months ended September 30, 2022.

*Fiscal Years Ended June 30, 2022 and 2021*

The Company reimbursed the former CEO for office rent and related expenses. The Company incurred charges for the former CEO for office expense reimbursement of $4,800 the year ended June 30, 2022 and 2021. As of June 30, 2022 and 2021, there were no amounts payable to the former CEO.

On May 4, 2017, the Company entered into a services agreement and a referral agreement with Contact Advisory Services Ltd., an entity that is partly owned by a member of the Board. The Company incurred general and administrative expenses of $26,148 and $96,020 for years ended June 30, 2022 and 2021, respectively, in accordance with these agreements. As of June 30, 2022 and 2021, there were no amounts payable to Contact Advisory Services Ltd.

The Company had retained services from a former member of its Board who remained as an advisor to the Company with an annual fee of $60,000. The member was previously retained through a consultancy agreement dated August 1, 2020 and an employment agreement dated June 15, 2020. The consultancy agreement required payments of £18,000 ($21,920 translated using the exchange rate in effect at June 30, 2022) per month to the firm that is controlled by this former member of the Board. The individual also received payroll of $500 per month through an employment agreement in the capacity as COO. The member resigned from the Board and from their role as COO on May 31, 2022 and the consultancy agreement and the employment agreement were terminated.

The Company retained the services of its former CFO and COO through a consultancy agreement dated April 2, 2022 and an employment agreement dated April 2, 2022. The Company remitted monthly payments to its former CFO and COO of NZD 36,995 ($23,524 translated using the exchange rate in effect at June 30, 2022) under the consultancy agreement and $500 per month under the employment agreement. In connection with this appointment the Company provided a one-time issuance of 200,000 shares of Common Stock to the former CFO and COO.

The Company had transactions with Tilt, LLC a game center operator controlled by the former head of GGC, a subsidiary of the Company. This included net sales to the game center of $222,559 for game center equipment, and amounts paid to Tilt. LLC of $33,600 for equipment leased, $16,589 for services, $20,128 for cryptocurrency mining and $140,000 for purchases of computer inventory during the year ended June 30, 2022.

**Transfer Agent and Registrar** 

The Transfer Agent and Registrar for shares of our common stock and preferred stock is VStock Transfer, LLC, Woodmere, New York. Our Transfer Agent and Registrar's telephone number is (212) 828-8436.

**LEGAL MATTERS**

The validity of the securities offered hereby has been passed upon for us by Holland & Knight LLP, Miami, Florida, and Westward Law LLC, Las Vegas, Nevada. Certain legal matters in connection with this offering have been passed upon for the underwriters by Pryor Cashman LLP, New York, New York.

**EXPERTS**

Our consolidated financial statements included in this prospectus and in the registration statement to the Annual Report on Form 10-K for the year ended June 30, 2022 have been so incorporated in reliance on the report of Friedman LLP, independent registered public accounting firm, with regard to the consolidated financial statements of the Company as of June 30, 2022 and 2021, and for the years then ended, which report includes an explanatory paragraph related to the substantial doubt about the Company's ability to continue as a going concern, given on the authority of said firm as experts in auditing and accounting.

**AVAILABLE INFORMATION**

We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. We have also filed a registration statement on Form S-1 under the Securities Act with the Securities and Exchange Commission with respect to the shares of our common stock offered through this prospectus. This prospectus is filed as a part of that registration statement but does not contain all of the information contained in the registration statement and exhibits. Statements made in the registration statement are summaries of the material terms of the referenced contracts, agreements or documents of the company. We refer you to our registration statement and each exhibit attached to it for a more detailed description of matters involving the company, and the statements we have made in this prospectus are qualified in their entirety by reference to these additional materials.

The Securities and Exchange Commission maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the Securities and Exchange Commission. Our registration statement and the referenced exhibits can also be found on this site. We also maintain a website at www.esportsentertainmentgroup.com.

While we are generally not required to deliver an annual report to our security holders, we currently intend to voluntarily do so when otherwise due, and will attach audited financial statements with such report.

**DEALER PROSPECTUS DELIVERY OBLIGATION**

Until [●], 2023, all dealers that effect transactions in these securities whether or not participating in this offering may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

**ESPORTS ENTERTAINMENT GROUP, INC.**

**INDEX TO THE FINANCIAL STATEMENTS**

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
| [Report of Independent Registered Public Accounting Firm](#R_001) (PCAOB ID 711) | F-2 |
| [Consolidated Balance Sheets as of June 30, 2022 and 2021](#R_002) | F-6 |
| [Consolidated Statements of Operations for the years ended June 30, 2022 and 2021](#R_003) | F-7 |
| [Consolidated Statements of Comprehensive Loss for the years ended June 30, 2022 and 2021](#R_004) | F-8 |
| [Consolidated Statements of Changes in 10% Series A Cumulative Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) for the years ended June 30, 2022 and 2021](#R_005) | F-9 |
| [Consolidated Statements of Cash Flows for the years ended June 30, 2022 and 2021](#R_006) | F-10 |
| [Notes to Consolidated Financial Statements](#R_007) | F-12 |
| [Condensed Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and June 30, 2022](#R_008) | F-58 |
| [Condensed Consolidated Statements of Operations for the Three Months Ended September 30, 2022 and 2021 (Unaudited)](#R_009) | F-59 |
| [Condensed Consolidated Statements of Comprehensive Loss for the Three Months Ended September 30, 2022 and 2021 (Unaudited)](#R_010) | F-60 |
| [Condensed Consolidated Statements of Changes in 10% Series A Cumulative Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) For the Three Months Ended September 30, 2022 and 2021 (Unaudited)](#R_011) | F-61 |
| [Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2022 and 2021 (Unaudited)](#R_012) | F-62 |
| [Notes to Unaudited Condensed Consolidated Financial Statements](#R_013) | F-64 |

---

**ESPORTS ENTERTAINMENT GROUP, INC.**

**Annual Report on Form 10-K**

**For the Year ended June 30, 2022**

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of Esports Entertainment Group, Inc.

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheets of Esports Entertainment Group, Inc. (the "Company") as of June 30, 2022 and 2021, and the related consolidated statements of operations, comprehensive loss, changes in 10% series A cumulative redeemable convertible preferred stock and stockholders' equity (deficit), and cash flows for each of the years in the two-year period ended June 30, 2022, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2022, in conformity with accounting principles generally accepted in the United States of America.

**Substantial Doubt about the Company's Ability to Continue as a Going Concern**

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company's significant accumulated deficit as of June 30, 2022, and recurring losses from operations and negative cash flows from operating activities, as well as the Company's noncompliance with debt covenants of its senior convertible note at the balance sheet date, raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

**Basis for Opinion**

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matters**

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

 ****

***Fair value measurement of contingent consideration and intangible assets acquired related to the acquisition of the business-to-consumer operations of Bethard Group Limited (hereafter "Bethard")***

**Description of the Matter**

As described in Notes 2 and 3 to the financial statements, on July 13, 2021 the Company completed the acquisition of the business-to-consumer operations of Bethard for total consideration of approximately $26.8 million, which included $6.7 million in contingent consideration, and resulted in approximately $18.1 million of intangible assets being recorded. The Company accounts for business combinations using the acquisition method, which requires recognition of assets acquired and liabilities assumed at their respective fair values at the date of acquisition. The contingent consideration is estimated using an income approach, which is based on a contractual amount owed based on projected revenues. The fair values of intangible assets acquired are typically estimated using an income approach, which is based on the present value of future discounted cash flows or cost based methods based on estimated costs to construct an asset. Management applied significant judgment in estimating the fair value of the contingent consideration and intangible assets acquired, which involved the use of significant estimates and assumptions with respect to the rate of future revenue growth, profitability of the acquired business and the discount rate, among other factors.

The principal considerations for our determination that performing procedures relating to the fair value measurement of the contingent consideration and intangible assets acquired related to the acquisition of Bethard is a critical audit matter are (i) the significant judgment by management, including the use of specialists, when estimating the fair values of intangible assets acquired; (ii) a high degree of auditor judgment and subjectivity in performing procedures relating to the fair value measurement of intangible assets acquired; (iii) the significant audit effort in evaluating the reasonableness of the significant assumptions relating to the rate of future revenue growth and profitability of the acquired business and the discount rate; and (iv) the audit effort involved the use of professionals with specialized skill and knowledge.

**How We Addressed the Matter in Our Audit**

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included identifying and evaluating the design of controls relating to the acquisition accounting, including controls over management's valuation of the intangible assets acquired and contingent consideration, and controls over the development of the valuation models, as well as the significant assumptions related to the rate of future revenue growth and profitability of the acquired business and the discount rate, and the costs to create an asset. These procedures also included, among others, (i) reading the purchase agreement; and (ii) testing management's process for estimating the fair values of the intangible assets acquired and contingent consideration. Testing management's process included evaluating the appropriateness of the valuation method, testing the completeness and accuracy of data provided by management, and evaluating the reasonableness of significant assumptions related to the rate of future revenue growth, profitability of the acquired business and the discount rate, and the estimated costs to construct the asset. Evaluating the reasonableness of the rate of future revenue growth and the profitability of the acquired business involved considering the historical performance of the acquired businesses and market comparable information, as well as economic and industry forecasts. The reasonableness of the discount rate was evaluated by considering the cost of capital of comparable businesses and other industry factors. Professionals with specialized skill and knowledge were used to assist in the evaluation of the appropriateness of the discounted cash flow models and the reasonableness of the discount rate.

 ****

 **

***Impairment assessments of goodwill and long-lived assets***

 

**Description of the Matter**

As described in Notes 2 and 7 to the financial statements, the Company reviews goodwill on an annual basis for impairment, or when events and circumstances indicate that the asset might be impaired. Additionally, the Company reviews long-lived assets, such as property and equipment, intangible assets subject to amortization, and right-of-use assets on operating leases for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. The Company's evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value, and impairment is recognized in the amount by which the carrying value exceeds the fair value. Recoverability of long-lived assets to be held and used is measured by a comparison of the carrying amount of the assets to the future undiscounted cash flows expected to be generated by the assets. If these assets are determined to be impaired, the amount of impairment recognized is the amount by which the carrying amount of the assets exceeds their fair value. Fair value amounts are estimated by management using discounted cash flow models. Management's cash flow models included significant judgements and assumptions relating to future cash flows, growth rates and discount rates. The Company's consolidated goodwill and long-lived assets balances were approximately $22.3 million and $30.6 million respectively at June 30, 2022. Based on the results of the impairment assessment, management recorded impairment of the Company's goodwill and long-lived assets of approximately $46.5 million for the year ended June 30, 2022.

The principal considerations for our determination that performing procedures relating to the impairment assessments of goodwill and long-lived assets is a critical audit matter are (i) the significant judgement required by management when developing the fair values of the reporting units; and (ii) a high degree of auditor judgement, subjectivity and effort in performing procedures to evaluate management's significant assumptions, including future cash flows, growth rates and discount rates.

**How We Addressed the Matter in Our Audit**

Addressing the matter involved performing procedures and evaluating audit evidence, in connection with forming our overall opinion on the financial statements. These procedures included evaluating the design effectiveness of controls relating to management's goodwill and long-lived asset impairment assessments, including controls over the determination of the fair values of the reporting units or assets, and future undiscounted cash flows used to determine if long-lived assets are recoverable. These procedures also included, among others, (i) testing management's process for developing the fair value estimates of the reporting units or assets; (ii) evaluating the appropriateness of the underlying discounted and undiscounted cash flow models; (iii) testing the completeness and accuracy of underlying data used in the models; and (iv) evaluating the reasonableness of the significant assumptions used by management, including the future cash flows, growth rates and discount rates. Evaluating management's significant assumptions related to future cash flows, growth rates and the discount rates involved, with the assistance of valuation specialists employed by us, evaluating whether the assumptions used by management were reasonable considering (i) the historical performance of the reporting units; (ii) the consistency with external market data and industry forecasts; and (iii) sensitivities over significant inputs and assumptions.

***Fair value of derivative and warrant liabilities***

 ****

**Description of the Matter**

As described in Notes 2, 12 and 18 to the financial statements, the Company issued a convertible note with detachable warrants that required management to assess whether the detachable warrants should be accounted for as a liability and whether the conversion feature of the convertible debt required bifurcation and separate valuation as a derivative liability. These instruments were determined to be liabilities and are classified as Level 3 as they contain one or more inputs to valuation which are unobservable and significant to their fair value measurement. The Company utilized valuation specialists to develop the valuation models and unobservable inputs to estimate fair value of these instruments. As of June 30, 2022, the fair values of the warrant and derivative liabilities were approximately $0.1 million and $9.4 million respectively.

The principal considerations for our determination that performing procedures relating to these instruments is a critical audit matter are (i) the significant judgment and estimation by management in determining the inputs to estimate fair value, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and in evaluating audit evidence obtained related to the fair value of these financial instruments, and (ii) the audit effort involved the use of professionals with specialized skill and knowledge.

**How We Addressed the Matter in Our Audit**

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial statements. These procedures included evaluating the design of controls relating to the Company's determination of the fair value. These procedures also included, among others, the involvement of professionals with specialized skill and knowledge to assist in developing an independent estimate of fair value of these financial instruments and comparing management's estimate to the independently developed estimate of fair value. Developing the independent estimate involved testing the completeness and accuracy of data provided by management, developing independent inputs and, as appropriate, evaluating and utilizing management's aforementioned unobservable inputs.

---

| |
|:---|
| */s/ Friedman LLP* |
| We have served as the Company's auditor since 2020. |
| Marlton, New Jersey |
| October 13, 2022 |

---

**Esports Entertainment Group, Inc.**

**Consolidated Balance Sheets**

---

| | | |
|:---|:---|:---|
|  | **June 30, 2022** | **June 30, 2021** |
| **ASSETS** |  |  |
| **<u>Current assets</u>** |  |  |
| Cash | $2517146 | $19917196 |
| Restricted cash | 2292662 | 3443172 |
| Accounts receivable, net | 304959 | 136681 |
| Receivables reserved for users | 2941882 | 2290105 |
| Other receivables | 372283 | 658745 |
| Prepaid expenses and other current assets | 1543053 | 3264344 |
| &nbsp;&nbsp;&nbsp;**Total current assets** | 9971985 | 29710243 |
| Equipment, net | 43925 | 726942 |
| Operating lease right-of-use asset | 164288 | 1272920 |
| Intangible assets, net | 30346489 | 45772555 |
| Goodwill | 22275313 | 40937370 |
| Other non-current assets | 2062176 | 1315009 |
| &nbsp;&nbsp;&nbsp;**TOTAL ASSETS** | $64864176 | $119735039 |
| **LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (DEFICIT)** |  |  |
| **<u>Current liabilities</u>** |  |  |
| Accounts payable and accrued expenses | $12344052 | $8458689 |
| Liabilities to customers | 4671287 | 3057942 |
| Deferred revenue | 575097 | 22110 |
| Senior convertible note | 35000000 |  |
| Derivative liability | 9399620 |  |
| Current portion of notes payable and other long-term debt | 139538 | 223217 |
| Operating lease liability – current | 364269 | 414215 |
| Contingent consideration | 3328361 | - |
| **Total current liabilities** | 65822224 | 12176173 |
| Senior convertible note, net of unamortized discount |  | 6302504 |
| Notes payable and other long-term debt |  | 221300 |
| Warrant liability | 2192730 | 23500000 |
| Deferred income taxes |  | 1870861 |
| Operating lease liability – non-current | 669286 | 878809 |
| &nbsp;&nbsp;&nbsp;**Total liabilities** | 68684240 | 44949647 |
| **Commitments and contingencies (Note 13)** |  |  |
| **<u>Mezzanine equity:</u>** |  |  |
| 10% Series A cumulative redeemable convertible preferred stock, $0.001 par value, 1,725,000 authorized, 835,950shares issued and outstanding, aggregate liquidation preference $9,195,450 at June 30, 2022 | 7781380 |  |
| **<u>Stockholders' equity (deficit)</u>** |  |  |
| Preferred stock $0.001par value; 10,000,000shares authorized |  |  |
| Common stock $0.001par value; 500,000,000shares authorized, 40,922,944and 21,896,145shares issued and outstanding as of June 30, 2022 and June 30, 2021, respectively | 40923 | 21896 |
| Additional paid-in capital | 144874173 | 122341002 |
| Accumulated deficit | (149140426) | (46908336) |
| Accumulated other comprehensive loss | (7376114) | (669170) |
| &nbsp;&nbsp;&nbsp;**Total stockholders' equity (deficit)** | (11601444) | 74785392 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (DEFICIT)** | $64864176 | $119735039 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**Esports Entertainment Group, Inc.**

**Consolidated Statements of Operations**

---

| | | |
|:---|:---|:---|
|  | **Year Ended June 30,** | **Year Ended June 30,** |
|  | **2022** | **2021** |
| Net revenue | $58351650 | $16783914 |
| **Operating costs and expenses:** |  |  |
| Cost of revenue | 24164661 | 7861317 |
| Sales and marketing | 25728220 | 10038524 |
| General and administrative | 51321978 | 24610511 |
| Asset impairment charges | 46498689 | - |
| Total operating expenses | 147713548 | 42510352 |
| **Operating loss** | 89361898 | 25726438 |
| **Other income (expense):** |  |  |
| Interest expense | (6423039) | (698973) |
| Loss on conversion of senior convertible note | (5999662) |  |
| Loss on extinguishment of senior convertible note | (28478804) |  |
| Change in fair value of derivative liability on senior convertible note | (10882241) |  |
| Change in fair value of warrant liability | 31468270 | (1549924) |
| Change in fair value of contingent consideration | 2355308 | (1748607) |
| Other non-operating income (loss), net | (584466) | (460328) |
| Total other income (expense), net | (18544634) | (4457832) |
| Loss before income taxes | 107906532 | 30184270 |
| Income tax benefit (expense) | 5674442 | 3811536 |
| **Net loss** | $102232090 | $26372734 |
| Dividend on 10% Series A cumulative redeemable convertible preferred stock | (501570) |  |
| Accretion of 10% Series A cumulative redeemable convertible preferred stock to redemption value | (182046) | - |
| **Net loss attributable to common stockholders** | $102915706 | $26372734 |
| Net loss per common share | $(3.56) | $(1.68) |
| Weighted average number of common shares outstanding, basic and diluted | 28886918 | 15723618 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**Esports Entertainment Group, Inc.**

**Consolidated Statements of Comprehensive Loss**

---

| | | |
|:---|:---|:---|
|  | **Year Ended June 30,** | **Year Ended June 30,** |
|  | **2022** | **2021** |
| Net loss | $102232090 | $26372734 |
| **Other comprehensive loss:** |  |  |
| Foreign currency translation loss | 6706944 | 669170 |
| Total comprehensive loss | $108939034 | $27041904 |

---

The accompanying notes are an integral part of these consolidated financial statements.

**Esports Entertainment Group, Inc.**

**Consolidated Statements of Changes in 10% Series A Cumulative Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit)**

**For the Years Ended June 30, 2022 and 2021**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **10% Series A Cumulative Redeemable** | **10% Series A Cumulative Redeemable** | | | | | | |
|  | **Convertible Preferred Stock** | **Convertible Preferred Stock** | **Common Stock** | **Common Stock** | | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** |<br>**Additional paid-in**<br>**capital** |<br>**Accumulated**<br>**Deficit** | **Accumulated**<br>**other comprehensive**<br>**loss** | **Total**<br>**Stockholders'<br> Equity**<br>**(Deficit)** |
| Balance as at July 1, 2020 |  | $- | 11233223 | $11233 | $31918491 | $(20535602) | $- | $11394122 |
| Stock issued for Argyll acquisition |  |  | 650000 | 650 | 3801850 |  |  | 3802500 |
| Stock issued for FLIP acquisition |  |  | 187616 | 188 | 2217433 |  |  | 2217621 |
| Stock issued for EGL acquisition |  |  | 355620 | 356 | 2791127 |  |  | 2791483 |
| Stock issued for ggCircuit acquisition |  |  | 830189 | 830 | 9272381 |  |  | 9273211 |
| Stock issued for Helix acquisition |  |  | 528302 | 528 | 5900605 |  |  | 5901133 |
| Common stock issued in equity financing, net of issuance costs |  |  | 2000000 | 2000 | 27338000 |  |  | 27340000 |
| Stock options and warrant exercises |  |  | 5508500 | 5509 | 34059351 |  |  | 34064860 |
| Common stock issued for services |  |  | 602695 | 602 | 4024144 |  |  | 4024746 |
| Stock based compensation |  |  |  |  | 1017620 |  |  | 1017620 |
| Foreign exchange translation |  |  |  |  |  |  | (669170) | (669170) |
| Net loss | - | - | - | - | - | (26372734) | - | (26372734) |
| Balance as at June 30, 2021 |  | $- | 21896145 | $21896 | $122341002 | $(46908336) | $(669170) | $74785392 |
| Proceeds from issuance of 10% Series A cumulative redeemable convertible preferred stock | 835950 | 7599334 |  |  |  |  |  |  |
| Accretion of redemption value and issuance costs |  | 182046 |  |  | (182046) |  |  | (182046) |
| 10% Series A cumulative redeemable convertible preferred stock cash dividend |  |  |  |  | (501570) |  |  | (501570) |
| Common stock and warrants issued in equity financing, net of issuance costs |  |  | 15000000 | 15000 | 3449925 |  |  | 3464925 |
| Conversion of senior convertible note |  |  | 2514459 | 2515 | 10650133 |  |  | 10652648 |
| Issuance of common stock under the ATM, net of issuance costs |  |  | 1165813 | 1166 | 3883943 |  |  | 3885109 |
| Common stock issued upon the exercise of stock options |  |  | 14000 | 13 | 67466 |  |  | 67479 |
| Common stock issued for services |  |  | 332527 | 333 | 747816 |  |  | 748149 |
| Stock based compensation |  |  |  |  | 4417504 |  |  | 4417504 |
| Foreign exchange translation |  |  |  |  |  |  | (6706944) | (6706944) |
| Net loss | - | - | - | - | - | (102232090) | - | (102232090) |
| Balance as at June 30, 2022 | 835950 | $7781380 | 40922944 | $40923 | $144874173 | $(149140426) | $(7376114) | $(11601444) |

---

The accompanying notes are an integral part of these consolidated financial statements.

**Esports Entertainment Group, Inc.**

**Consolidated Statements of Cash Flows**

---

| | | |
|:---|:---|:---|
|  | **For the Years Ended June 30,** | **For the Years Ended June 30,** |
|  | **2022** | **2021** |
| **Cash flows from operating activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | $(102232090) | $(26372734) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization and depreciation | 12026581 | 3416252 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Asset impairment charges | 46498689 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Right-of-use asset amortization | 506742 | 162545 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 5165653 | 4129726 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | (5671861) | (4136258) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on conversion of senior convertible note | 5999662 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loss on extinguishment of senior convertible note | 28478804 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discount and premium | 3389055 | 467504 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of warrant liability | (31468270) | 1549924 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of contingent consideration | (2355308) | 1748607 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in the fair value of derivative liability | 10882241 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of business | (1069262) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other non-cash charges, net |  | 2460 |
| &nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (133968) | 76040 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Receivables reserved for users | (624803) | (2260031) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other receivables | 193224 | 10477 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 1530812 | (2246119) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other non-current assets | 161645 | (220329) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | 5029309 | 4312871 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Liabilities to customers | 1920260 | 672403 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | 552987 | (83339) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liability | 213461 | (108363) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other, net | - | (4642) |
| Net cash used in operating activities | (21006437) | (18883006) |
| **Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash consideration paid for Bethard acquisition, net of cash acquired | (20067871) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash consideration paid for Lucky Dino, net of cash acquired |  | (28930540) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash consideration paid for ggCircuit |  | (14993977) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash consideration paid for Helix |  | (9964691) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash consideration paid for Argyll, net of cash acquired |  | (728926) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash consideration paid for EGL, net of cash acquired |  | (622503) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash consideration paid for FLIP |  | (100000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale of assets | 159872 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of intangible assets | (34648) | (730234) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of equipment | (137729) | (62385) |
| Net cash used in investing activities | (20080376) | (56133256) |
| **Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from equity financing, net of issuance costs | 13625925 | 27340000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of 10% Series A cumulative redeemable convertible preferred stock, net of issuance costs | 7599334 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of dividends on 10% Series A cumulative redeemable convertible preferred stock | (501570) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Issuance of common stock under the ATM, net of issuance costs | 3885109 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of Bethard contingent consideration | (1016331) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from exercise of stock options and warrants, net of issuance costs | 67479 | 26584860 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of Senior Convertible Note |  | 35000000 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of debt issuance costs |  | (2485000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayment of notes payable and finance leases | (171661) | (83659) |
| Net cash provided by financing activities | 23488285 | 86356201 |
| Effect of exchange rate on changes in cash and restricted cash | (952032) | (332879) |
| Net increase (decrease) in cash and restricted cash | (18550560) | 11007061 |
| Cash and restricted cash, beginning of year | 23360368 | 12353307 |
| Cash and restricted cash, end of year | $4809808 | $23360368 |

---

A reconciliation of cash and restricted cash to the consolidated balance sheets follows:

---

| | | |
|:---|:---|:---|
|  | **June 30, 2022** | **June 30, 2021** |
| Cash | $2517146 | $19917196 |
| Restricted cash | 2292662 | 3443172 |
| Cash and restricted cash | $4809808 | $23360368 |

---

---

| | |
|:---|:---|
|  | **June 30, 2020** |
| Cash | $12353307 |
| Restricted cash | - |
| Cash and restricted cash | $12353307 |

---

---

| | | |
|:---|:---|:---|
| SUPPLEMENTAL CASH FLOW INFORMATION: |  |  |
| CASH PAID FOR: |  |  |
|  | June 30, 2022 | June 30, 2021 |
| Interest | $2434291 | $226517 |
| Income taxes | $(2581) | $23433 |
| SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES: |  |  |
| Fair value of contingent consideration payable in cash and common stock for Bethard acquisition | $6700000 |  |
| Conversion of senior convertible notes to common stock | $10652648 |  |
| Accretion of 10% Series A cumulative redeemable convertible preferred stock | $182046 |  |
| Right-of-use asset obtained in exchange for operating lease obligation | $1112960 |  |
| Finance lease asset obtained in exchange for financing lease obligation | $96018 |  |
| Fair value of warrants issued as debt discount on senior convertible note | $- | $26680000 |
| Common stock issued for ggCircuit | $- | $9273211 |
| Common stock issued for Helix | $- | $5901133 |
| Common stock issued for Argyll | $- | $3802500 |
| Fair value of warrants issued for Argyll acquisition | $- | $2750076 |
| Settlement of Argyll acquisition warrant liability for common stock | $- | $7480000 |
| Common stock issued for EGL at closing | $- | $2193833 |
| Settlement of EGL contingent holdback consideration in common stock | $- | $597650 |
| Common stock issued for FLIP acquisition at closing | $- | $411817 |
| Settlement of FLIP contingent consideration in common stock | $- | $500000 |
| Right-of-use assets and liabilities acquired through operating leases | $- | $1408942 |
| Equipment acquired through finance lease | $- | $117979 |
| Share settlement of liabilities to be settled in stock account | $- | $927855 |

---

The accompanying notes are an integral part of these consolidated financial statements.

Esports Entertainment Group, Inc.

Notes to the Consolidated Financial Statements

June 30, 2022

**Note 1 – Nature of Operations**

Esports Entertainment Group, Inc. (the "Company" or "EEG") was formed in the State of Nevada on July 22, 2008 under the name Virtual Closet, Inc., before changing its name to DK Sinopharma, Inc. on June 6, 2010 and then to, Vgambling, Inc. on August 12, 2014. On or about April 24, 2017, Vgambling, Inc. changed its name to Esports Entertainment Group, Inc.

The Company is a diversified operator of iGaming, traditional sports betting and esports businesses with a global footprint. The Company's strategy is to build and acquire iGaming and traditional sports betting platforms and use them to grow the esports business whereby customers have access to online tournaments and player-versus-player wagering. On July 31, 2020, the Company commenced revenue generating operations with the acquisition of LHE Enterprises Limited, holding company for Argyll Entertainment ("Argyll"), an online sportsbook and casino operator. On January 21, 2021, the Company completed its acquisition of Phoenix Games Network Limited, the holding company for the Esports Gaming League ("EGL"), and provider of event management and team services, including live and online events and tournaments. On March 1, 2021, the Company completed the acquisition of the operating assets and specified liabilities that comprise the online gaming operations of Lucky Dino Gaming Limited, a company registered in Malta, and Hiidenkivi Estonia OU, its wholly owned subsidiary registered in Estonia (collectively referred to as "Lucky Dino").

On June 1, 2021, the Company acquired ggCircuit, LLC ("GGC") and Helix Holdings, LLC ("Helix"). GGC is a business-to-business software company that provides cloud-based management for gaming centers, a tournament platform and integrated wallet and point-of-sale solutions. Helix operated esports centers that provided esports programming and gaming infrastructure. The Helix game center assets in Foxboro, MA and North Bergen, NJ, herein referred to as the "Helix Game Centers" were sold on June 10, 2022. EEG Labs, the analytics platform, and the yet to be released proprietary player-versus-player wagering platform Betground (previously referred to as LanDuel) from the Helix acquisition were retained. On July 13, 2021, the Company completed its acquisition of the online casino and sports book business operating under the brand of Bethard (referred to herein as "Bethard"). The acquisition of Bethard is discussed further in Note 3, *Business Combinations*.

**Note 2 – Summary of Significant Accounting Policies**

**Basis of presentation and principles of consolidation**

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation.

**Reportable Segments**

The Company operates two complementary business segments:

*<u>EEG iGaming</u>*

EEG iGaming includes the Company's iGaming casino and sportsbook product offerings. Currently, the Company operates the business to consumer segment primarily in Europe.

*<u>EEG Games</u>*

EEG Games delivers esports entertainment experiences to gamers through a combination of 1) the Company's proprietary infrastructure software, GGC, which underpins our focus on esports and is a leading provider of local area network ("LAN") center management software and services, enabling us to seamlessly manage mission critical functions such as game licensing and payments, 2) online tournaments (through the Company's EGL tournament platform), and 3) player-vs-player wagering (through our yet to be released Betground our proprietary wagering product). Currently, we operate our esports EEG Games business in the United States and Europe.

These segments consider the organizational structure of the Company and the nature of financial information available and reviewed by the chief operating decision maker to assess performance and make decisions about resource allocations.

**Use of Estimates**

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the valuation and accounting for equity awards related to warrants and stock-based compensation, determination of fair value for derivative instruments, the valuation and recoverability of goodwill and intangible assets, the accounting for business combinations, including estimating contingent consideration and allocating purchase price, estimating fair value of intangible assets, as well as the estimates related to accruals and contingencies.

**Liquidity and Going Concern**

The accompanying consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these consolidated financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

The Company has determined that certain factors raise substantial doubt about its ability to continue as a going concern for a least one year from the date of issuance of these consolidated financial statements. One such factor considered by the Company is its compliance with certain debt covenants under terms of the Senior Convertible Note (the "Senior Convertible Note" or "New Note"), issued by the Company on February 22, 2022 in the principal amount of $35,000,000. The Company has not maintained compliance with certain debt covenants and is currently in default under the terms of the Senior Convertible Note. On February 28, 2022 the Company exchanged the existing Senior Convertible Note (the "Old Senior Convertible Note"), issued by the Company on June 2, 2021 in the principal amount of $35,000,000 with the New Note resulting in the increase of the principal outstanding balance of indebtedness from the carrying value of $29,150,001, as adjusted for the conversions of principal and a minimum return ("Premium on Principal") equal to 6.0% of any outstanding principal through February 22, 2022, to $35,000,000. .. The New Note is classified as a current liability on the consolidated balance sheet as it may be redeemed by the Holder prior to its maturity date. The Company has also recorded a derivative liability for the alternate conversion in the Senior Convertible Note of $9,399,620 in current liabilities on the consolidated balance sheet that may be due to the Holder as part of the make-whole liability under the default terms of the Senior Convertible Note. The cash liability calculated under the terms of the New Note of approximately $180,000,000, is materially higher than the fair value of the derivative liability of $9,399,620 calculated at June 30, 2022. The calculated make-whole liability may differ materially from the amount at which the Company may be required to pay under the New Note. The Company has held non-binding discussions with the Holder to restructure its obligation under the New Note. However, there can be no guarantee that the Company will be able to reach an agreement to restructure the New Note. See Note 12 for additional information regarding the Old Senior Convertible Note and the New Note, and the potential effects on the Company's business, financial condition, and results of operations.

In addition to compliance with debt covenants, the Company considered that it had an accumulated deficit of $149,140,426 as of June 30, 2022 and that in recent years it has had a history of recurring losses from operations and recurring negative cash flows from operations as it has prepared to grow its esports business through acquisition and new venture opportunities. At June 30, 2022, the Company had total current assets of $9,971,985 and total current liabilities of $65,822,224. Net cash used in operating activities for the year ended June 30, 2022 was $21,006,437, which includes a net loss of $102,232,090. The Company also considered its current liquidity as well as future market and economic conditions that may be deemed outside the control of the Company as it relates to obtaining financing and generating future profits. On March 2, 2022 the Company closed an offering (the "March 2022 Offering") in which it sold 15,000,000 units at $1.00 consisting of one share of Common Stock and one warrant for a total of 15,000,000 warrants with an exercise price of $1.00 (the "March 2022 Warrants"). The March 2022 Offering provided net cash proceeds of $13,605,000. There was also an overallotment option exercised to purchase warrants to purchase an additional 2,250,000 shares of common stock (the "April 2022 Overallotment Warrants") with an exercise price of $1.00 issued to the underwriters of the offering on April 1, 2022. As of June 30, 2022, the Company had $2,517,146 of available cash on-hand and net current liabilities of $55,850,239. On September 19, 2022 the Company closed an offering (the "September 2022 Offering") in which it sold (a) 30,000,000 shares of Common Stock, $0.001 par value per share and (b) warrants to purchase up to 30,000,000 shares of Common Stock, at an exercise price of $0.25 per share (the "September 2022 Warrants"), at an aggregate price of $0.25 per share and accompanying September 2022 Warrant. The gross proceeds to us from the sale of the shares of Common Stock and Warrants before deducting underwriting discounts and commissions and offering expenses payable by the Company was $7,500,000. The Company also granted an Overallotment for 3,600,000 Overallotment Warrants ("September 2022 Overallotment Warrants"), at a purchase price of $0.01 per warrant, with an exercise price of $0.25 per warrant. Total proceeds from the September 2022 Overallotment Warrants were $36,000. The Company remitted to the Holder of the Senior Convertible Note an amount of $2,265,928 equal to fifty percent (50%) of all net proceeds above $2,000,000 following the payment of 7% in offering fees including Underwriting discounts and commissions. In addition, as part of the September 2022 Offering, the Holder purchased $512,500 of securities (2,050,000 shares of Common Stock and 2,050,000 Warrants) and the Company paid the Holder an additional $512,500. The proceeds remitted to the Holder of the Senior Convertible Note reduced the principal balance of the Senior Convertible Note on a dollar-for-dollar basis. The net proceeds received by the Company, after deducting underwriting discounts and commissions and offering expenses payable by the Company and amounts remitted to the Holder of the Senior Convertible Note was $4,080,990. The amount of available cash on hand on October 12, 2022, one business day preceding this filing, was $2,571,692.

The Company believes that its current level of cash and cash equivalents are not sufficient to fund its operations and obligations without additional financing. Although the Company has financing available, as further described below, the ability to raise financing using these sources is subject to several factors, including market and economic conditions, performance, and investor sentiment as it relates to the Company and the esports and iGaming industry. The combination of these conditions was determined to raise substantial doubt regarding the Company's ability to continue as a going concern for a period of at least one year from the date of issuance of these consolidated financial statements.

In determining whether the Company can overcome the presumption of substantial doubt about its ability to continue as a going concern, the Company may consider the effects of any mitigating plans for additional sources of financing. The Company identified additional financing sources it believes are currently available to fund its operations and drive future growth that include (i) the potential proceeds from the exercise of the 15,000,000 March 2022 Warrants and the 2,250,000 April 2022 Overallotment Warrants, exercisable at $1.00, outstanding at June 30, 2022, (ii) the potential proceeds from the exercise of the 30,000,000 September 2022 Warrants and 3,600,000 September Overallotment Warrants, exercisable at $0.25, that were issued subsequent to June 30, 2022 (iii) the ability to sell shares of Common Stock of the Company through various forms of offerings, and (iv) the ability to raise additional financing from other sources. The Company is also continuing discussions with the Holder of the Senior Convertible Note to restructure the payment terms and debt covenants.

Net cash provided by financing activities for the year ended June 30, 2022 totaled $23,488,285, which related to proceeds from the issuance of 15,000,000 units, each consisting of one share of Common Stock and one March 2022 Warrant, as part of the March 2022 Offering, the issuance of the shares of the 10% Series A cumulative redeemable convertible preferred stock and the issuance of Common Stock of 1,165,813 shares through the at-the-money equity offering program ("ATM"), partially offset by the payment of the dividends on the 10% Series A cumulative redeemable convertible preferred stock, the contingent consideration of Bethard and repayments of notes payable and finance lease.

These above plans are likely to require the Company to place reliance on several factors, including favorable market conditions, to access additional capital in the future. These plans were therefore determined not to be sufficient to overcome the presumption of substantial doubt about the Company's ability to continue as a going concern. The consolidated financial statements do not reflect any adjustments that might result from the outcome of this uncertainty.

**COVID-19**

The novel coronavirus ("COVID-19") emerged in December 2019 and has since adversely impacted global commercial activity, disrupted supply chains and contributed to significant volatility in financial markets. The ongoing impacts of the COVID-19 pandemic has introduced material uncertainty and risk with respect to the Company and its performance, especially as it relates to in-person attendance at events and game centers.

The Company has previously indicated that a significant or prolonged decrease in consumer spending on entertainment or leisure activities may have an adverse effect on demand for the Company's product offerings, including in-person access to game centers and tournaments, reducing cash flows and revenues, and thereby materially harming the Company's business, financial condition and results of operations. During the year ended June 30, 2022, the Company determined that in-person attendance at its Helix and customer game centers was not expected to attain levels previously forecasted for such period. Additionally, projections for the Argyll business included continued losses into fiscal 2023 due to high levels of competition in the UK market and high regulatory burdens placed on the iGaming businesses in the UK market. Further, the levels of investment by the Company that are necessary to achieve the previous revenue projections impacted a number of the Company's businesses. As such, the Company recognized an impairment of long-lived assets held by its Argyll, GGC, EGL, and Helix businesses and impairment of goodwill held by its Argyll, EGL, GGC and Helix businesses. On June 10, 2022, the Company disposed of the assets and related liabilities of two Helix Game Centers located in New Jersey and Massachusetts. See Notes 6, 7 and 11 for discussion of the asset impairment charges.

The ultimate impact of the COVID-19 pandemic on other areas of the business will depend on future developments, which are uncertain and may result in an extended period of continued business disruption and reduced operations. A materially disruptive resurgence of COVID-19 cases or the emergence of additional variants or strains of COVID-19 could cause other widespread or more severe impacts depending on where infection rates are highest. Any resulting financial impact cannot be reasonably estimated at this time but may have a material adverse impact on the Company's business, financial condition and results of operations. The Company will continue to monitor developments relating to disruptions and uncertainties caused by COVID-19.

**Nasdaq Continued Listing Rules or Standards**

On April 11, 2022, the Company received a deficiency notification letter from the Listing Qualifications Staff of the Nasdaq Stock Market (the "Nasdaq") indicating that the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2) because the bid price for the Company's Common Stock had closed below $1.00 per share for the previous thirty consecutive business days.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company had 180 calendar days from the date of such notice, or until October 10, 2022, to regain compliance with the minimum bid price requirement. To regain compliance, the bid price for the Company's Common Stock must have closed at $1.00 per share or more for a minimum of ten consecutive business days.

On June 7, 2022, the Company received a further letter from the listing qualifications department staff of Nasdaq notifying the Company that for the last 30 consecutive business days, the Company's minimum Market Value of Listed Securities ("MVLS") was below the minimum of $35 million required for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(b)(2).

In accordance with Nasdaq Listing Rule 5810(c)(3)I, the Company has 180 calendar days, or until December 5, 2022, to regain compliance. The notice states that to regain compliance, the Company's MVLS must close at $35 million or more for a minimum of ten consecutive business days (or such longer period of time as the Nasdaq staff may require in some circumstances, but generally not more than twenty consecutive business days) during the compliance period ending December 5, 2022.

On October 11, 2022 the Company received a letter from Nasdaq that the Company's Common Stock will be delisted, and the Company's Common Stock warrants traded under the symbols GMBLW and GMBLZ and the Company's 10% Series A cumulative redeemable convertible preferred stock traded under symbol GMBLP will no longer qualify for listing, and in that regard trading of the Company's Common Stock, Common Stock warrants and 10% Series A cumulative redeemable convertible preferred stock will be suspended at the opening of business on October 20, 2022, if we have not requested an appeal. The Company is eligible to request an appeal of the delisting determination. Under Nasdaq rules, while any appeal is pending, the suspension of trading of the Company's Common Stock, warrants and 10% Series A cumulative redeemable convertible preferred stock will be stayed and will continue to trade on Nasdaq until the Nasdaq hearing panel makes a determination after the hearing.

While the Company is exercising diligent efforts to maintain the listing of its Common Stock on Nasdaq, there can be no assurance that the Company will be able to regain or maintain compliance with the Nasdaq listing standards.

**Cash and Cash Equivalents**

Cash includes cash on hand. Cash equivalents consist of highly liquid financial instruments purchased with an original maturity of three months or less. As of June 30, 2022 and June 30, 2021, the Company did not have any financial instruments classified as cash equivalents. At times, cash deposits inclusive of restricted cash may exceed Federal Deposit Insurance Corporation ("FDIC") insured limits. Accounts are insured by the FDIC up to $250,000 per financial institution. There have been no losses recognized on cash balances held at these financial institutions.

**Restricted Cash**

Restricted cash includes cash reserves maintained for compliance with gaming regulations that require adequate liquidity to satisfy the Company's liabilities to customers.

**Accounts Receivable**

Accounts receivable is comprised of the amounts billed to customers principally for esports events and team management services. Accounts receivable is recorded net of an allowance for credit losses. The Company performs ongoing credit evaluations for its customers and determines the amount of the allowance for credit losses upon considering such factors as historical losses, known disputes or collectability issues, the age of a receivable balance as well as current economic conditions. Bad debt expense is recorded to maintain the allowance for credit losses at an appropriate level and changes in the allowance for credit losses are included in general and administrative expense in the consolidated statements of operations. At June 30, 2022 and 2021, the allowance for credit losses was not material to the consolidated financial statements of the Company.

**Receivables Reserved for Users**

User deposit receivables are stated at the amount the Company expects to collect from a payment processor. A user initiates a deposit with a payment processor, and the payment processor remits the deposit to the Company. The amount due from the payment processor is recorded as a receivable reserved for users on the consolidated balance sheets. An allowance for doubtful accounts may be established if it is determined that the Company is unable to collect a receivable from a payment processor. An increase to the allowance for doubtful accounts is recognized as a loss within general and administrative expenses in the consolidated statements of operations. The allowance for doubtful accounts is not material to the consolidated financial statements.

**Equipment**

Equipment is stated at cost less accumulated depreciation. The Company capitalizes the direct cost of equipment as well as expenditures related to improvements and betterments that add to the productive capacity or useful life of the equipment. Depreciation is computed utilizing the straight-line method over the estimated useful life of the asset, or for leasehold improvements, the shorter of the initial lease term or the estimated useful life of the improvements. The estimated useful life of equipment by asset class follows:

Schedule of Estimated Useful Life of Asset

Computer Equipment Up to 5 years <br> Furniture and fixtures Up to 7 years <br> Leasehold improvements Shorter of the remaining lease term or estimated life of the improvement

The estimated useful life and residual value of equipment are reviewed and adjusted, if appropriate, at the end of each reporting period. The costs and accumulated depreciation of assets that are sold, retired, or otherwise disposed of are removed from the accounts and the resulting gain or loss is recognized as a gain or loss on sale or disposition of assets in the consolidated statements of operations.

**Digital Assets**

Digital assets for the year ended June 30, 2022 comprised of Ethereum cryptocurrency ("Ethereum" or "ETH)". The digital assets are included in current assets in the accompanying consolidated balance sheets. The classification of digital assets as a current asset has been made after the Company's consideration of the consistent daily trading volume on cryptocurrency exchange markets. There are no limitations or restrictions on the Company's ability to sell digital assets. Digital assets purchased are recorded at cost and cryptocurrencies awarded to the Company through its mining activities are accounted for in connection with the Company's revenue recognition policy disclosed below.

Digital assets held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital asset at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. Impairment losses of the Company's digital assets were not material to the consolidated financial statements for the years ended June 30, 2022 and June 30, 2021.

The Company accounts for its gains or losses in accordance with the first in first out (FIFO) method of accounting. The Company generally liquidates its digital assets position monthly, or more frequently depending upon the market conditions. The Company's recognized realized gains through the sale and disbursement of digital assets during the years ended June 30, 2022 and 2021 was not material to the consolidated financial statements. At June 30, 2022 and 2021, the Company's digital assets were $0 and $223,515, respectively.

The Ethereum upgrade from proof of work to proof of stake occurred in mid-September 2022, subsequent to the financial year end. On the day of the upgrade no additional mining of ETH was possible, and this required the Company to switch to a different digital asset. The switch in assets is not expected to have a material impact on the Company's financial position or results of operations.

**Business Combinations**

The Company accounts for business combinations using the acquisition method of accounting. The Company records the assets acquired, liabilities assumed and acquisition-related contingent consideration at fair value on the date of acquisition. The difference between the purchase price, including any contingent consideration, and the fair value of net assets acquired is recorded as goodwill. The Company may adjust the preliminary purchase price and purchase price allocation, as necessary, during the measurement period of up to one year after the acquisition closing date as it obtains more information as to facts and circumstances that impact the determination of fair value at the acquisition date. Any change in fair value of acquisition-related contingent consideration resulting from events after the acquisition date is recognized in earnings. Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred.

**Goodwill**

Goodwill represents the excess of fair value of consideration paid for an acquired entity over the fair value of the assets acquired and liabilities assumed in a business combination. Goodwill is not amortized but rather it is tested for impairment at the reporting unit level on an annual basis on April 1 for each fiscal year, or more often if events or changes in circumstances indicate that more likely than not the carrying amount of the asset may not be recoverable. A reporting unit represents an operating segment or a component of an operating segment. In accordance with ASC Topic 350 *Intangibles - Goodwill and Other*, as of June 30, 2022 the Company's business is classified into four reporting units: iGaming Malta (including Bethard and Lucky Dino), iGaming Argyll UK, EGL, and GGC. The Helix business was sold as of June 10, 2022 and was previously its own reporting unit.

In testing goodwill for impairment, the Company has the option to begin with a qualitative assessment, commonly referred to as "Step 0," to determine whether it is more likely than not that the fair value of a reporting unit containing goodwill is less than its carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as macroeconomic conditions, industry and market considerations, cost factors, entity-specific financial performance and other events, including changes in the Company's management, strategy and primary user base. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company then performs a quantitative goodwill impairment analysis by comparing the carrying amount to the fair value of the reporting unit. If it is determined that the fair value is less than its carrying amount, the excess of the goodwill carrying amount over the implied fair value is recognized as an impairment loss in accordance with Accounting Standards Update ("ASU") No. 2017-04, *Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment*. The Company utilizes a discounted cash flow analysis, referred to as an income approach, and uses internal and market multiples, to assess reasonableness of assumptions, to determine the estimated fair value of the reporting units. For the income approach, significant judgments and assumptions including anticipated revenue growth rates, discount rates, gross margins, operating expenses, working capital needs and capital expenditures are inherent in the fair value estimates, which are based on the Company's operating and capital forecasts. As a result, actual results may differ from the estimates utilized in the income approach. The use of alternate judgments and/or assumptions could result in a fair value that differs from the Company's estimate and could result in the recognition of additional impairment charges in the financial statements. As a test for reasonableness, the Company also considers the combined fair values of the Company's reporting units to a reasonable market capitalization of the Company. The Company may elect not to perform the qualitative assessment for some or all reporting units and perform a quantitative impairment test.

During the quarter ended March 31, 2022, the Company's share price had a significant decline and the Company's ability to invest in its businesses was impacted. This was determined to be a triggering event and the long-lived assets of the Company were quantitatively tested for impairment. As of March 31, 2022, the Company recognized goodwill asset impairment charges of $23,119,755 to the goodwill of the GGC, EGL and Helix reporting units, which are all part of the EEG Games segment. There was no further impairment identified as of the annual testing date from that recognized as of March 31, 2022. During the last three months of the fiscal year, the Company's share price further declined and the macro environment was unstable, and the Company determined that a separate triggering event had occurred as of June 30, 2022. The Company performed an additional quantitative analysis and recorded a further goodwill asset impairment charge of $3,852,876 to the goodwill of the iGaming Argyll (UK) reporting unit, which is part of the EEG iGaming segment, for a total of $26,972,631 for the year ended June 30, 2022 (see Note 7 for additional information regarding the goodwill impairment, and the effects on the Company's business, financial condition, and results of operations). There were no goodwill impairment charges recorded during the year ended June 30, 2021. Further downturns in economic, regulatory and operating conditions and the continuing impact of COVID-19 could result in additional goodwill impairment in future periods.

**Intangible assets**

Intangible assets with determinable lives consist of player relationships, developed technology and software, tradenames and gaming licenses. Intangible assets with determinable lives are amortized on a straight-line basis over their estimated useful lives of 5 years for player relationships and developed technology and software, 10 years for tradenames and 2 years for gaming licenses. The Company also capitalizes internal-use software costs such as external consulting fees, payroll and payroll-related costs and stock-based compensation for employees in the Company's development and information technology groups who are directly associated with, and who devote time to, the Company's internal-use software projects. Capitalization begins when the planning stage is complete and the Company commits resources to the software project and continues during the application development stage. Capitalization ceases when the software has been tested and is ready for its intended use. Costs incurred during the planning, training and post-implementation stages of the software development life cycle are expensed as incurred. The Company also holds indefinite-lived intangible assets in the form of digital assets as discussed above in Digital Assets.

**Impairment of Long-Lived Assets**

Equipment and other long-lived assets, including finite lived intangibles, are evaluated for impairment periodically or when events and circumstances indicate that the carrying amount of an asset may not be recoverable. If an evaluation is required, an estimate of future undiscounted cash flows are determined through estimated disposition date of the asset. To the extent that estimated future undiscounted net cash flows attributable to the asset are less than the carrying amount, an impairment loss is recognized equal to the difference between the carrying value of such asset and its fair value, considering external market participant assumptions. An estimation of future cash flows requires significant judgment as the Company makes assumptions about future results and market conditions. Since the determination of future cash flows is an estimate of future performance, there may be impairments recognized in future periods in the event future cash flows do not meet expectations.

During the year ended June 30, 2022, the Company recognized a total impairment charge of $19,526,058 on its long-lived assets. This included $3,972,022 for the impairment of the Argyll tradename, developed technology, gaming license and customer relationships from the EEG iGaming segment, and $13,484,122 for the impairment of the EGL tradename, developed technology and software, GGC and Helix tradenames and developed technology from the EEG Games segment (see Note 7), $653,107 for the total equipment, net impairment, including $44,481 for the Argyll computer equipment and furniture and equipment from the EEG iGaming segment, and $608,626 for EGL computer equipment, Helix Game Centers computer equipment, leasehold improvements and furniture and equipment from the EEG Games segment (see Note 6), and $1,416,807 for the impairment of operating lease right-of-use assets for the Helix building rentals from the EEG Games segment (see Note 11). This was recognized in asset impairment charges in the consolidated statements of operations. There were no impairment charges on long-lived assets identified for the year ended June 30, 2021.

**Liabilities to Customers**

The Company records liabilities to customers, also referred to as player liabilities, for the amounts that may be withdrawn by a player at a given time. The player liabilities include player deposits, bonuses or incentive awards and user winnings less withdrawals, tax withholdings and player losses. The Company maintains a restricted cash balance and player deposits held by third parties, recorded as receivables reserved for users on the consolidated balance sheets, at levels equal to or exceeding its liabilities to customers.

**Jackpot Provision**

The jackpot provision liability is an estimate of the amount due to players for jackpot winnings. The jackpot liability is accrued monthly based on an estimate of the jackpot amount available for winning. The jackpot increases with each bet on a jackpot eligible iGaming casino machine and a portion of each losing bet is allocated towards the funding of the jackpot amount. Jackpots are programmed to be paid out randomly across certain casino brands. When a player wins a jackpot, the amount of the jackpot is reset to a defined amount that varies across eligible iGaming casino machines. Participating iGaming casino machines of the Company pool into the same jackpot and therefore the winning of a jackpot affects other players on the network of participating iGaming casino machines. Jackpot winnings reduce revenue at the time the entity has the obligation to pay the jackpot, which occurs when the jackpot is won by the player.

**Leases**

The Company leases for office space and game center space through operating lease agreements that were a result of its acquisitions of Argyll, Lucky Dino and Helix. The Company also leased other property and equipment, acquired through Helix, that was subsequently sold as part of the Helix sale transaction where the purchaser assumed the lease liabilities. The Company measures an operating lease right-of-use ("ROU") asset and liability, as well as a finance lease asset and liability, based on the present value of the future minimum lease payments over the lease term at the commencement date. Minimum lease payments include the fixed lease and non-lease components of the agreement, as well as any variable rent payments that depend on an index, initially measured using the index at the lease commencement date.

The minimum payments under operating leases are recognized on a straight-line basis over the lease term in the consolidated statements of operations. Operating lease expenses related to variable lease payments are recognized as operating expenses in a manner consistent with the nature of the underlying lease and as the events, activities, or circumstances in the lease agreement occur. Leases with a term of less than 12 months ("short-term leases") are not recognized on the consolidated balance sheets. The rent expense for short-term leases is recognized on a straight-line basis over the lease term and included in general and administrative expense on the consolidated statements of operations.

**Income Taxes**

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the consolidated financial statements or in the Company's tax returns. Deferred tax assets and liabilities are determined on the basis of the differences between U.S. GAAP treatment and tax treatment of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by considering taxable income in carryback years, existing taxable temporary differences, prudent and feasible tax planning strategies and estimated future taxable profits.

The Company accounts for uncertainty in income taxes recognized in the consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate, as well as the related net interest and penalties.

**Derivative Instruments**

The Company evaluates its convertible notes, equity instruments and warrants, to determine if those contracts or embedded components of those contracts qualify as derivatives (Note 12). The result of this accounting treatment is that the fair value of the embedded derivative is recorded at fair value each reporting period and recorded as a liability (Note 18) in the consolidated balance sheets. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statements of operations as other income or expense (Note 18).

In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to a liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the balance sheet as current or non-current to correspond with its host instrument. The Company records the fair value of the remaining embedded derivative at each balance sheet date and records the change in the fair value of the remaining embedded derivative as other income or expense in the consolidated statements of operations.

**Fair Value Measurements**

Fair value is defined as the price that would be received for an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. When determining the fair value measurements for assets and liabilities, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. The following summarizes the three levels of inputs required to measure fair value, of which the first two are considered observable and the third is considered unobservable:

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| | |
|:---|:---|
| Level 1: | Unadjusted quoted prices in active markets for identical assets or liabilities. |
| Level 2: | Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
| Level 3: | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |

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Certain assets and liabilities are required to be recorded at fair value on a recurring basis. The Company adjusts contingent consideration resulting from a business combination, derivative financial instruments and warrant liabilities to fair value on a recurring basis. Certain long-lived assets may be periodically required to be measured at fair value on a nonrecurring basis, including long-lived assets that are impaired. The fair value for other assets and liabilities such as cash, restricted cash, accounts receivable, receivables reserved for users, other receivables, prepaid expenses and other current assets, accounts payable and accrued expenses, and liabilities to customers have been determined to approximate carrying amounts due to the short maturities of these instruments. The fair value of the Senior Convertible Note and lease liabilities approximate their carrying value based on current interest and discount rates.

**Earnings Per Share**

Basic income (loss) per share is calculated using the two-class method. Under the two-class method, basic income (loss) is computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period excluding the effects of any potentially dilutive securities. Diluted income (loss) per share is computed similar to basic income (loss) per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if potential common shares had been issued if such additional common shares were dilutive. Diluted income (loss) per share includes the effect of potential common shares, such as the Company's preferred stock, notes, warrants and stock options, to the extent the effect is dilutive. As the Company had net losses for all the periods presented, basic and diluted loss per share are the same, and additional potential common shares have been excluded, as their effect would be anti-dilutive.

The following securities were excluded from weighted average diluted common shares outstanding for the year ended June 30, 2022 and 2021 because their inclusion would have been antidilutive:

Schedule of Weighted Average Diluted Common Shares Outstanding

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| | | |
|:---|:---|:---|
|  | **2022** | **2021** |
| Common stock options | $1110526 | $474676 |
| Common stock warrants | 22600558 | 5350558 |
| Common stock issuable upon conversion of senior convertible note | 16031513 | 2120000 |
| 10% Series A cumulative redeemable convertible preferred stock | 835950 |  |
| Total | $40578547 | $7945234 |

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**Comprehensive Loss**

Comprehensive loss consists of the net loss for the year and foreign currency translation adjustments related to the effect of foreign exchange on the value of assets and liabilities. The net translation loss for the year is included in the consolidated statements of comprehensive loss.

**Foreign Currency**

The transaction currencies of the Company include the U.S. dollar, British Pound and Euro. The reporting currency of the Company is the U.S. dollar. Assets and liabilities of the Company's foreign operations with functional currencies other than the U.S. dollar are translated at the exchange rate in effect at the balance sheet date, while revenues and expenses are translated at average rates prevailing during the periods. Translation adjustments are reported in accumulated other comprehensive loss, a separate component of stockholders' equity. Transaction gains and losses arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency. The Company recorded a foreign exchange transaction loss for the years ended June 30, 2022 and 2021 of $149,573 and $440,452, respectively. Transaction gains and losses are reported within other non-operating income (loss), net, on the consolidated statements of operations.

**Stock-based Compensation**

The Company periodically issues stock-based compensation to employees, directors, contractors and consultants for services rendered. Stock-based compensation granted to employees and non-employee directors includes grants of restricted stock and employee stock options that are measured and recognized based on their fair values determined on the grant date. The award of restricted stock and stock options, which are generally time vested, are measured at the grant date fair value and charged to earnings on a straight-line basis over the vesting period. The fair value of stock options is determined utilizing the Black-Scholes option-pricing model, which is affected by several variables, including the risk-free interest rate, the expected dividend yield, the expected life of the equity award, the exercise price of the stock option as compared to the fair market value of the Common Stock on the grant date, and the estimated volatility of the Common Stock over the term of the equity award. The fair value of restricted stock is determined by the closing market price of the Company's Common Stock on the date of grant. The compensation cost for service-based stock options granted to consultants is measured at the grant date, based on the fair value of the award, and is expensed on a straight-line basis over the requisite service period (the vesting period of the award).

**Sales and Marketing**

Sales and marketing expenses are comprised primarily of advertising costs that include online search advertising and placement, including advertising with affiliates for the online betting and casino operations, as well as other promotional expenses paid to third parties, including expenses related to sponsorship agreements. Sales and marketing expense for the years ended June 30, 2022 and 2021 was $25,728,220 and $10,038,524, respectively.

**Revenue and Cost Recognition**

The revenue of the Company is currently generated from online casino and sports betting (referred to herein as "EEG iGaming revenue"), and esports revenue (referred to herein as "EEG Games Revenue"), consisting of the sales of subscriptions to access cloud-based software used by independent operators of game centers, from consulting and data analytic services provided to game operators ("EEG Games Esports and Other Revenue"), and from the provision of esports event and team management services ("EEG Games Esports Event Management and Team Service Revenue"). The Company recognizes revenue in accordance with Accounting Standards Codification ("ASC") Topic 606 – *Revenue from Contracts with Customers* ("ASC 606") when control of a product or service is transferred to a customer. The amount of revenue is measured at the transaction price, or the amount of consideration that the Company expects to receive in exchange for transferring a promised good or service. The transaction price includes estimates of variable consideration to the extent that it is probable that a significant reversal of revenue recognized will not occur.

Revenue generating activities of the Company may be subject to value added tax ("VAT") in certain jurisdictions in which the Company operates. Revenue is presented net of VAT in the consolidated statements of operations. VAT receivables and VAT payables are included in other receivables and accounts payable and accrued expenses, respectively on the consolidated balance sheets. Sales to customers do not have significant financing components or payment terms greater than 12 months.

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***EEG iGaming Revenue***

EEG iGaming revenue is derived from the placement of bets by end-users, also referred to as customers, through online gaming sites. The transaction price in an iGaming contract, or Net Gaming Revenue ("NGR"), is the difference between gaming wins and losses, as further reduced by any nondiscretionary incentives awarded to the customer. Gaming transactions involve four performance obligations, namely the settlement of each individual bet, the honoring of discretionary incentives available to the customer through loyalty reward programs, the award of free spin and deposit match bonuses, and the winning of a casino jackpot. The total amount wagered by a customer is commonly referred to as the win or Gross Gaming Revenue ("GGR"). The GGR is allocated to each performance obligation using the relative standalone selling price ("SSP") determined for iGaming contracts.

Revenue recognition for individual wagers is recognized when the gaming occurs, as such gaming activities are settled immediately. The revenue allocated to incentives, such as loyalty points offered through a rewards program, is deferred and recognized as revenue when the loyalty points are redeemed. Revenue allocated to free spins and deposit matches, referred to as bonuses, are recognized at the time that they are wagered. The revenue for jackpot games is recognized when the jackpot is won by the customer. The Company applies a practical expedient by accounting for its performance obligations on a portfolio basis as iGaming contracts have similar characteristics. The Company expects the application of the revenue recognition guidance to a portfolio of iGaming contracts will not materially differ from the application of the revenue recognition guidance on an individual contract basis.

The Company evaluates bets that its users place on websites owned by third party brands in order to determine whether it may recognize revenue on a gross basis, when acting as the principal provider of the wagering service, or on a net basis, when acting as an intermediary or agent. The principal in a wagering service involving a third party is generally the entity that controls the wagering service such that it has a right to the services being performed by the third party and can direct the third party in delivery of the service to its users. The Company records revenue on a gross basis as it has determined it is the principal in transactions involving third parties, such as revenue sharing arrangements, as it controls the wagering service being offered to the users such that it has a right to the service performed by third parties and can further direct third parties in providing services to users. The Company further records expenses related to its revenue sharing arrangements and other third-party iGaming expenses within costs of revenue in the consolidated statements of operations.

***EEG Games*** ***Revenue***

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*EEG Games Esports and Other Revenue*

The Company derives revenue from sales of subscriptions to access cloud-based software used by independent operators of game centers, as well as from consulting and data analytic services provided to game operators. The revenue derived from the sale of subscription services to cloud-based software used by game centers is recognized over the term of the contract, which generally can range from one month to one year in duration, beginning on the date the customer is provided access to the Company's hosted software platform. The revenue from the operation of game centers by the Company is recognized when a customer purchased time to use the esports gaming equipment at each center. The revenue from time purchased by a customer and from the sale of concessions is recognized at the point of sale.

The software subscriptions also allow for game center operators to enable their equipment to mine cryptocurrency when gaming stations are not in use by the end user. The software allows the participating game center operators to contribute their computer power for the purpose of adding a block to the blockchain within a mining pool where the Company and the participating game center operators are participants. The Company's software enables the participating game center operators to enter into mining pools with mining pool operators to provide computing power to the mining pool to mine cryptocurrency digital assets. The Company and the participating game center operators are entitled to a fractional share of the fixed cryptocurrency digital asset award the mining pool operator receives (less transaction fees to the mining pool operator) for successfully adding a block to the blockchain. The Company and participating game center operators' fractional share is based on the proportion of computing power contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. A digital asset award is received by the Company from the mining pool, in the form of crypto currency (i.e., Ethereum), for successfully adding a block to the blockchain. The Company records a payable for the amount due to each participating game center operator, in the form of U.S. dollars, based on the participating game center operators' computing power contributed toward the mining of the award less a fee charged by the Company. The amounts due to the participating game center operators are paid in U.S. dollars. The Company recognizes the fair value of the digital awards, net of fees and amounts payable to the game center operators, as revenue at the time the digital award is added to the blockchain using the price of the digital coin quoted in U.S. dollars. The transaction consideration of the digital award the Company receives, if any, is non-cash consideration. The Company records revenue on a net basis as it has determined it is the agent in the transactions with the mining pool and facilitates the provision of the computing power and payments for the participating game center operators. The transaction consideration for the mining of cryptocurrency is variable consideration as it is based on the number of blocks added to the blockchain and the amount of the digital asset received from the mining pool. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is currently no specific definitive guidance under U.S. GAAP or an alternative accounting framework for the accounting for digital assets recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the Financial Accounting Standards Board ("FASB"), the Company may be required to change its policies, which could impact the Company's consolidated financial position and results from operations.

The Company further provides consultation services related to the use of hardware and equipment for gaming operations together with implementation services that include sourcing, training, planning, and installation of technology. The Company considers services related to hardware and equipment, implementation, and any design of user interface for the customer as separate performance obligations. Revenue for hardware equipment and design of custom user interface is recognized at a point in time upon delivery and completion. Implementation services are recognized over time, as services are performed.

The Company also has contracts with software companies to provide talent data analytics and related esports services, which include analytic development, other related services to develop software and applications for tournaments, and to provide data support, data gathering, gameplay analysis and reporting which includes talent analytics and related esports services, including analytic development, data analysis, survey design, interview services, player dossiers, and expert services. The Company recognizes revenue from its data analytic services over the life of the contract utilizing the output method, using a direct measurement of the value to the customer of the goods or services transferred to date relative to the remaining goods or services promised under the contact. The Company elected to use the right to invoice practical expedient and recognize revenue based on the amounts invoiced. The payment terms and conditions vary by contract; however, the Company's terms generally require payment within 30 to 60 days from the invoice date.

The Company has partnership contracts with strategic customers within the esports industry. The partnership contracts are negotiated agreements, which contain both licensing arrangements of intellectual property and development services, including fixed and variable components. The variability of revenue is driven by development plans and results of sales as specified by the partnership contract, which are known as of an invoice date. Partnership contracts generally do not have terms that extend beyond one year. The Company considers licensing arrangements and development services as separate performance obligations. Licensing revenues are recorded over time. Revenue associated with development is recognized over time, as labor is incurred.

Contracts that contain multiple performance obligations require an allocation of the transaction price to each distinct performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct good or service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account the Company's overall pricing objectives, considering market conditions and other factors, including the value of the deliverables in the contracts, customer demographics, geographic locations, and the number and types of users within the contracts.

*EEG Games Esports Event Management and Team Service Revenue*

The Company derives revenue from esports event management and team services. Esports event management services support the creation, production and delivery of an esports event by providing event staffing, gaming consoles, and other technical goods and services for a customer event that is either hosted live in person or online. The revenue generated from esports event management services is generally earned on a fixed fee basis per event.

The esports team services offerings of the Company include recruitment and management services offered to sports clubs to facilitate their entrance into esports tournament competition. Team services provided to a customer may include player recruitment, administration of player contracts, processing of tournament admission, providing logistical arrangements, as well as providing ongoing support to the team during the event. Team services are earned on a fixed fee basis per tournament.

Esports event management and team services revenues are recognized over the term of the event or the relevant contractual term for services as this method best depicts the transfer of control to the customer. The Company recognizes revenue for event management services based on the number of days completed for the event relative to the total days of the event. Revenue from team management services is recognized from inception of the contract through the end of the tournament using the number of days completed relative to the total number of days in the contract term. Revenue collected in advance of the event management or team services is recorded as deferred revenue on the consolidated balance sheets. The Company may also enter into profit sharing arrangements which are determined based on the net revenue earned by the customer for an event in addition to a fixed fee. Revenue recognition for profit sharing arrangements is recognized at the time the revenue from the event is determined, which is generally at the conclusion of the event. An event or team services contact may further require the Company to distribute payments to event or tournament attendees resulting in the recognition of a processing fee by the Company. The Company does not recognize revenue from the processing of payments until the conclusion of the event or tournament.

The Company evaluates the service being provided under an esports event and team services contract to determine whether it should recognize revenue on a gross basis as the principal provider of the service, or on a net basis in a manner similar to that of an agent. The Company has determined that for esports event and team services contracts that allow for the assignment of individual tasks to a third-party contractor, the Company acts as the principal provider of the service being offered to the customer as it remains primarily responsible for fulfilling the contractual promise to the customer. In profit sharing arrangements, such as events that allow for the Company to share in the revenue earned by a customer for an event, the Company has determined it acts in the role of an agent to the customer as the event creator. The Company has also determined it acts as an agent when it collects a processing fee for performing the service of distributing prize money on behalf of its customers to event or tournament winners.

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***Contract Liabilities***

Liabilities to customers include both player liabilities, consisting of a free spin bonus and a deposit match bonus, and the player reward liabilities. The free spin bonus provides the user the opportunity to a free play, or otherwise spin, on an iGaming casino slot machine without withdrawing a bet amount from the player's account. The deposit match bonus matches a player's deposit up to a certain specified percentage or amount. These bonuses represent consideration payable to a customer and therefore are treated as a reduction of the transaction price in determining NGR. The Company also offers non-discretionary loyalty rewards points to customers that can be redeemed for free play or cash. The Company allocates revenue from wagers to loyalty points rewards earned by users, thereby deferring a portion of revenue from users that participate in a loyalty reward program. The amount of revenue deferred related to loyalty points available to users is based on the estimated fair value of the loyalty point incentive available to the user.

The Company also records payments received in advance of performance under an esports gaming services contract or event management or team services contract as deferred revenue.

**Recently Adopted Accounting Pronouncements**

In December 2019, the FASB issued ASU No. 2019-12*, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes*. The new standard eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company adopted this standard as of July 1, 2021. The adoption of this guidance did not have a material impact on the accompanying consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, *Intangibles – Goodwill and Other: Simplifying the Test for Goodwill Impairment (ASC 350).* The standard eliminates the requirement to measure the implied fair value of goodwill by assigning the fair value of a reporting unit to all assets and liabilities within that unit (the Step 2 test) from the goodwill impairment test. Instead, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited by the amount of goodwill in that reporting unit. The guidance is effective for the fiscal years beginning after December 15, 2022. Early adoption is permitted. The Company adopted this standard during the year ended June 30, 2022. See Note 7 for additional information regarding the results of the impairment tests performed on its goodwill and intangible assets.

**Recently Issued Accounting Standards**

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): *Accounting for Contract Assets and Contract Liabilities from Contracts with Customers*, which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with Accounting Standards Codification Topic 606. The guidance is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements and it does not expect the guidance to have a material effect on its consolidated financial statements.

In May 2021, the FASB issued ASU 2021-04, *Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40).* The standard clarifies and reduces diversity in an issuer's accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. An entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as an exchange of the original instrument for a new instrument. The guidance is effective for the fiscal years beginning after December 15, 2021. Early adoption is permitted. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

In June 2020, the FASB issued ASU No. 2020-06, *Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity's Own Equity (Subtopic 815-40).* This standard eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity's own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. For public business entities, it is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years using the fully retrospective or modified retrospective method. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, *Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments*. The amendments included in ASU 2016-13 require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Although the new standard, known as the current expected credit loss ("CECL") model, has a greater impact on financial institutions, most other organizations with financial instruments or other assets (trade receivables, contract assets, lease receivables, financial guarantees, loans and loan commitments, and held-to-maturity (HTM) debt securities) are subject to the CECL model and will need to use forward-looking information to better evaluate their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 was originally effective for public companies for fiscal years beginning after December 15, 2019. In November of 2019, the FASB issued ASU 2019-10, *Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates*, which delayed the implementation of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for smaller reporting companies. The Company is currently evaluating the impact that the adoption of this guidance will have on its consolidated financial statements.

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that the Company adopts as of the specified effective date. The Company does not believe that the impact of recently issued standards that are not yet effective will have a material impact on the Company's financial position or results of operations upon adoption.

**Note 3 – Business Acquisitions**

***Bethard Acquisition***

On July 13, 2021, the Company completed the acquisition of the business-to-consumer operations of Bethard Group Limited ("Bethard"), which provides sportsbook, casino, live casino and fantasy sport betting services with gaming licenses to customers in Sweden, Spain, Malta and Ireland (the "Bethard Business"), from Gameday Group Plc, a limited liability company incorporated in Malta (the "Seller"). The acquisition of Bethard expanded the iGaming operations of the Company in Europe and provides the Company with increased opportunity to cross-sell its esports offerings to a larger customer base. The acquisition of Bethard resulted in the Company acquiring the outstanding share capital of Prozone Limited, a public liability company registered in Malta, that had previously received the assets of Bethard in a pre-closing restructuring by the Seller. The initial payment of purchase consideration for Bethard included cash paid at closing of €13,000,000 (equivalent to $15,346,019 using exchange rates in effect at the acquisition date), including €1,000,000 (equivalent to $1,180,463 using exchange rates in effect at the acquisition date) paid for a regulatory deposit with the Spanish Gaming Authority. The cash purchase consideration of Bethard also included a second payment ("Second Payment") of €4,000,000 (approximately $4,721,852 using exchange rates in effect at the acquisition date) that was paid by the Company on November 16, 2021 (the "Second Payment Due Date"), using the proceeds raised from the issuance of the 10% Series A Cumulative Redeemable Convertible Preferred Stock (see Note 15 for discussion of the 10% Series A Cumulative Redeemable Convertible Preferred Stock). The total purchase consideration of Bethard also requires the Company to pay additional contingent cash consideration during the 24-month period following the acquisition date equal to 15% of net gaming revenue until the date of the Second Payment, with the percentage then decreasing to 12% of net gaming revenue for the remaining term ending July 2023. The total purchase consideration also provides for a payment of up €7,600,000 (equivalent to $8,971,519 using exchange rates in effect at the acquisition date) of contingent share consideration should a specific ambassador agreement be successfully assigned to the Bethard Business acquired by the Company following the acquisition date.

The purchase consideration, including the fair value of the contingent cash consideration, is as follows:

Schedule of Preliminary Purchase Price Allocation of Acquisition

---

| | |
|:---|:---|
| Cash paid at closing | $15346019 |
| Second Payment | 4721852 |
| Total cash consideration paid for Bethard | 20067871 |
| Contingent cash consideration | 6700000 |
| Total purchase price consideration | $26767871 |

---

The contingent cash consideration assumes a cash payment equal to 15% of net gaming revenue for the Bethard Business through the Additional Payment Due Date as set forth through the Second Payment Due Date estimated to be approximately four months at acquisition, then reverting to 12% thereafter for the remainder of a two-year period following the acquisition date. The estimated contingent cash consideration of $6,700,000 is calculated using the applicable percentages applied to projected net gaming revenue of the Bethard Business at the date of acquisition. Based on updated revenue projections as of June 30, 2022, the Company determined the fair value of the remaining contingent consideration payable to be $3,328,361, net of the amount paid to the Seller through June 30, 2022 of $1,016,331. The decrease in the contingent cash consideration liability resulted in the recognition of a benefit of $2,355,308, included as change in fair value of contingent consideration in the consolidated statement of operations for the year ended June 30, 2022.

The purchase consideration excludes contingent share consideration payable to the Seller as there is no indication such contingent share contingent consideration will become payable from a successful assignment of the specified ambassador agreement. The Seller of the Bethard Business had up to 6 months to assign the ambassador agreement to receive the contingent share consideration. After the 6 months, the contingent share consideration is reduced by €422,222 (equivalent to $498,417 using exchange rates in effect at the acquisition date) for each month the contract is not assigned to the Company through the 24-month anniversary. As of October 12, 2022, one business day preceding this filing, the ambassador agreement had not been assigned to the Company.

The purchase price and purchase price allocation of the assets acquired and liabilities assumed is as follows:

---

| | |
|:---|:---|
| Receivables reserved for users | $3109782 |
| Intangible assets | 18100000 |
| Goodwill | 11292685 |
| Other non-current assets | 1180463 |
| Accrued liabilities | (5634) |
| Player liability | (3108425) |
| Deferred income taxes | (3801000) |
| Total | $26767871 |

---

The acquired intangible assets, useful lives and fair value at the acquisition date follows:

Schedule of Fair Value of Acquired Intangible Assets

---

| | | |
|:---|:---|:---|
|  | **Useful Life**<br> **(years)** | **Fair Value** |
| Tradename | 10 | $3500000 |
| Player interface | 5 | 1200000 |
| Gaming licenses | 2 | 700000 |
| Player relationships | 5 | 12700000 |
| Total |  | $18100000 |

---

Qualitative factors that contribute to the recognition of goodwill include certain intangible assets that are not being recognized as separate identifiable intangible assets apart from goodwill. Intangible assets not recognized apart from goodwill consist primarily of benefits from securing buyer-specific synergies that increase revenue and profits and are not otherwise available to a marketplace participant, as well as acquiring a talented workforce and cost savings opportunities. The goodwill of Bethard is not deductible for tax purposes. Transaction related expenses incurred for the acquisition of the Bethard Business total $1,005,594, including $255,481 incurred for the year ended June 30, 2022 and $750,113 for the year ended June 30, 2021. Transaction related expenses are recorded in general and administrative expenses in the consolidated statements of operations.

***Acquisition of GGC***

On June 1, 2021, the Company completed its acquisition of the issued and outstanding membership units of GGC. The total consideration paid at closing was $24,273,211, with $14,100,000 paid in cash at closing and $900,000 paid through application of loans receivable from GGC, inclusive of operating advances, toward the purchase consideration (net cash paid by the Company inclusive of cash advanced as loans receivable was $14,993,977 after adjustment for cash acquired of $6,023). The Company also issued 830,189 shares common stock at closing using a value per share $13.25 pursuant to the GGC Purchase Agreement. The fair value of the share consideration paid at closing was determined to be $9,273,211 using the closing share price of the Company on the date of acquisition.

The loans receivable applied toward the purchase consideration had originated during the negotiation to purchase GGC, whereby the Company had advanced an aggregate of $600,000 to GGC during 2020 in the form of loans ("GGC Loans"). Upon execution of the purchase agreement to acquire GGC, the Company paid GGC an additional $600,000 to be used for operating expenses pending the closing of the GGC acquisition ("GGC Operating Expense Payments"). The Company had recorded these advances totaling $1,200,000 as loans receivable at March 31, 2021 pending the closing of the acquisition. The Company was to receive full credit toward the purchase consideration for the GGC Loans and GGC Operating Expense Payments if the acquisition of GGC were to close by April 30, 2021. If acquisition of GGC were to close after April 30, 2021, but on or prior to May 14, 2021, the Company was to receive full credit toward the purchase price for the GGC Loans, and a credit toward the purchase price equal to 60% of the GGC Operating Expense Payments. If the acquisition closed after May 14, 2021, the Company was to receive full credit toward the purchase price for the GGC Loans, and a credit toward the purchase price equal to 50% of the GGC Operating Expense Payments. The acquisition did not close by May 14, 2021, and therefore the Company had forgiven 50% of the GGC Operating Expense Payments or $300,000 and applied the remaining balance of the total loans receivable, or $900,000 toward the purchase price of GGC.

A summary of the purchase consideration follows:

---

| | |
|:---|:---|
| Cash paid at closing | $14100000 |
| Loans receivable applied toward purchase consideration | 900000 |
| Share consideration issued at closing | 9273211 |
| Total purchase price consideration | $24273211 |

---

The allocation of assets acquired and liabilities assumed follows:

---

| | |
|:---|:---|
| Cash | $6023 |
| Accounts receivable | 102701 |
| Prepaid expenses and other current assets | 97083 |
| Equipment | 7704 |
| Intangible assets | 16300000 |
| Goodwill | 11445832 |
| Accounts payable and accrued expenses | (263132) |
| Deferred tax liability | (3423000) |
| Total | $24273211 |

---

The acquired intangible assets, useful life and fair value determined at the acquisition date follows:

---

| | | |
|:---|:---|:---|
|  | **Useful Life (years)** | **Fair Value** |
| Tradename | 10 | $2600000 |
| Developed technology | 5 | 13300000 |
| Customer relationships | 5 | 400000 |
| Total |  | $16300000 |

---

The results of operations of GGC are included in the consolidated financial statements of the Company for the year ended June 30, 2021 since the date of acquisition. The goodwill recorded in the GGC acquisition is not deductible for tax purposes. Transaction related expenses were $801,317 for the year ended June 30, 2021 and are included in general and administrative expenses in the consolidated statements of operations. The transaction expenses incurred for the GGC acquisition include a charge of $300,000 related to the forgiveness of the GGC Operating Expense Payments discussed above, and an additional $100,000 of operating expense advances to fund the GGC operations prior to closing that were not eligible to be applied toward the purchase consideration.

***Acquisition of Helix***

On June 1, 2021, the Company completed its acquisition of the issued and outstanding membership units of Helix. The total consideration paid at closing was $17,000,000, with $9,400,000 paid in cash and $600,000 paid through application of loans receivable from Helix, inclusive of operating advances, toward the purchase consideration (net cash paid by the Company inclusive of cash advances as loans receivable was $9,964,691 after adjustment for cash acquired of $35,309). The Company also issued 528,302 shares of common stock at closing using a value per share of $13.25 pursuant to the Helix Purchase Agreement. The fair value of the share consideration paid at closing to be $5,901,133 using the closing share price of the Company on the date of acquisition.

The loans receivable applied toward the purchase consideration had originated during the negotiation to purchase Helix, whereby the Company had advanced an aggregate of $400,000 to Helix during 2020 and 2021 in the form of loans ("Helix Loans"). Upon execution of the purchase agreement to acquire Helix, the Company paid Helix an additional $400,000 to be used for operating expenses pending the closing of the Helix acquisition ("Helix Operating Expense Payments"). The Company had recorded these advances totaling $800,000 as loans receivable at March 31, 2021 pending the closing of the acquisition. The Company was to receive full credit toward the purchase consideration for the Helix Loans and Helix Operating Expense Payments if the acquisition of Helix were to close by April 30, 2021. If acquisition of Helix were to close after April 30, 2021, but on or prior to May 14, 2021, the Company was to receive full credit toward the purchase price for the Helix Loans, and a credit toward the purchase price equal to 60% of the Helix Operating Expense Payments. If the acquisition closed after May 14, 2021, the Company was to receive full credit toward the purchase price for the Helix Loans, and a credit toward the purchase price equal to 50% of the Helix Operating Expense Payments. The acquisition did not close by May 14, 2021, and therefore the Company had forgiven 50% of the Helix Operating Expense Payments or $200,000 and applied the remaining balance of the total loans receivable, or $600,000 toward the purchase price of Helix.

A summary of the purchase consideration follows:

---

| | |
|:---|:---|
| Cash paid at closing | $9400000 |
| Loans receivable applied toward purchase consideration | 600000 |
| Share consideration issued at closing | 5901133 |
| Total purchase price consideration | $15901133 |

---

The allocation of assets acquired and liabilities assumed follows:

---

| | |
|:---|:---|
| Cash | $35309 |
| Accounts receivable | 3054 |
| Prepaid expenses and other current assets | 76933 |
| Equipment | 643537 |
| Operating lease right-of-use asset | 803503 |
| Intangible assets | 3600000 |
| Goodwill | 12393591 |
| Other non-current assets | 31015 |
| Deferred revenue | (9036) |
| Deferred income taxes | (756000) |
| Operating lease liability | (803503) |
| Long-term debt | (117270) |
| Total | $15901133 |

---

The acquired intangible assets, useful lives fair value determined at the acquisition date follows:

---

| | | |
|:---|:---|:---|
|  | **Useful Life (years)** | **Fair Value** |
| Tradename | 10 | $800000 |
| Developed technology | 5 | 2800000 |
| Total |  | $3600000 |

---

The results of operations of Helix are in the consolidated financial statements of the Company for the year ended June 30, 2021 since the date of acquisition. The goodwill recorded in the Helix acquisition is not deductible for tax purposes. Transaction related expenses were $604,603 for the year ended June 30, 2021 are included in general and administrative expenses in the consolidated statements of operations. The transaction expenses incurred for the Helix acquisition include a charge of $200,000 related to the forgiveness of Helix Operating Expense Payments discussed above, and an additional $100,000 of operating expense advances to fund the Helix operations prior to closing that were not eligible to be applied toward the purchase consideration.

***Acquisition of Lucky Dino***

On March 1, 2021, the Company completed the acquisition of the operating assets and specified liabilities that comprise the online gaming casino operations of Lucky Dino for cash paid at closing €25,000,000 ($30,133,725 using exchange rates in effect at the acquisition date), or with net cash paid being €24,001,795 ($28,930,540 using exchange rates in effect at the acquisition date) after adjustment for cash acquired of €998,205 ($1,203,185 using exchange rates in effect at the acquisition date). The acquisition of Lucky Dino was funded with available cash on hand.

The allocation assets acquired and liabilities assumed follows:

---

| | |
|:---|:---|
| Restricted cash | $1203185 |
| Other receivables | 131111 |
| Equipment | 13765 |
| Operating lease right-of-use asset | 371898 |
| Intangible assets | 19100000 |
| Goodwill | 10541217 |
| Other non-current assets | 37840 |
| Accounts payable and accrued expenses | (319149) |
| Liabilities to customers | (574244) |
| Operating lease liability | (371898) |
| Total | $30133725 |

---

The acquired intangible assets, useful lives and fair value determined at the acquisition date follows:

---

| | | |
|:---|:---|:---|
|  | **Useful Life (years)** | **Fair Value** |
| Tradename | 10 | $2100000 |
| Gaming licenses | 2 | 800000 |
| Developed technology | 5 | 5500000 |
| Player relationships | 5 | 10700000 |
| Total |  | $19100000 |

---

The results of operations of Lucky Dino are included in the consolidated financial statements of the Company for the year ended June 30, 2021 since the date of acquisition. The goodwill recorded in the Lucky Dino acquisition is deductible for tax purposes. Transaction related expenses were $1,280,766 for the year ended June 30, 2021 and are included in general and administrative expenses in the consolidated statements of operations.

***Acquisition of EGL***

On January 21, 2021, the Company acquired all the issued and outstanding share capital of EGL for total purchase consideration of $2,975,219. The total purchase consideration included $481,386 of cash paid at closing, (net cash paid at closing being $477,350 after adjustment for cash acquired of $4,036), and the issuance of 292,511 shares of common stock with a fair value of $2,193,833 as determined using the closing share price on the date of acquisition. The purchase consideration also included an estimate of $300,000 for contingent consideration ("Holdback Consideration") payable by the Company in cash and share consideration based on the progress of EGL towards the achievement of certain revenue targets based on the ability of EGL to achieve certain revenue targets by May 16, 2021. The Holdback Consideration was settled by the Company for $145,153 paid in cash, (increasing the total cash paid for EGL to $622,503), and through issuance of 63,109 shares of common stock with a fair value of $597,650, as determined using the closing price on the date of settlement. The incremental consideration paid in excess of the amount estimated at Holdback Consideration of $442,803 was recorded to change in fair value of contingent consideration within the statement of operations for the year ended June 30, 2021.

The terms of the EGL purchase agreement may further require the Company to pay an additional $2,750,000 (equivalent to approximately £2,000,000 of purchase price using exchange rates at the acquisition date) in contingent earnout consideration ("Earnout Consideration") if EGL is to achieve an earnings benchmark on the 18-month anniversary of the closing date. On the date of acquisition, the Company determined that the likelihood of a payout of the Earnout Consideration was remote and therefore did not assign a value to the Earnout Consideration on the date of acquisition. This considers the Earnout Consideration benchmark increases during the earnout period for amounts invested by the Company in the operations of EGL. The Earnout Consideration benchmark used to determine the minimum threshold for payment of additional purchase consideration payable by the Company also increases should there be an increase in the value of the share consideration that was issued by the Company on the date of acquisition.

A summary of the purchase consideration follows:

---

| | |
|:---|:---|
| Cash paid at closing | $481386 |
| Share consideration issued at closing | 2193833 |
| Holdback Consideration | 300000 |
| Total purchase price consideration | $2975219 |

---

The allocation of assets acquired and liabilities assumed follows:

---

| | |
|:---|:---|
| Cash | $4036 |
| Accounts receivable | 141031 |
| Other receivables | 32923 |
| Equipment | 11274 |
| Intangible assets | 1371789 |
| Goodwill | 1978668 |
| Other non-current assets | 5382 |
| Accounts payable and accrued expenses | (118157) |
| Deferred revenue | (95062) |
| Notes payable | (68589) |
| Deferred income taxes | (288076) |
| Total | $2975219 |

---

The acquired intangible assets, useful lives and fair value at the acquisition date follows:

---

| | | |
|:---|:---|:---|
|  | **Useful Life (years)** | **Fair Value** |
| Tradename | 10 | $411537 |
| Developed technology | 5 | 823073 |
| Customer relationships | 5 | 137179 |
| Total |  | $1371789 |

---

The following table summarizes the change in fair value of the Holdback Consideration that was settled by the Company through the payment of cash and issuance of common stock:

---

| | |
|:---|:---|
| Fair value of contingent share consideration at January 21, 2021 | $300000 |
| Change in fair value contingent consideration | 442803 |
| Payment of Holdback Consideration in cash | (145153) |
| Stock issued of Holdback Contingent in shares | (597650) |
| Fair value of contingent share consideration at June 30, 2021 | $— |

---

The results of operations of EGL are included in the consolidated financial statements of the Company for the year ended June 30, 2021 since the date of acquisition. The goodwill recorded in the EGL acquisition is not deductible for tax purposes. Transaction related expenses were immaterial for the year ended June 30, 2021.

***Acquisition of Argyll***

On July 31, 2020, the Company acquired Argyll, an online casino and sportsbook operator for total purchase consideration $7,802,576. The purchase consideration includes $1,250,000 in cash comprised of a cash deposit of $500,000 that had been paid during the year ended June 30, 2020, as well as cash paid at closing of $750,000 (net cash paid being $728,926 in fiscal 2021 after adjustment for cash acquired of $21,074). The purchase consideration also includes the issuance of 650,000 shares of common stock with a fair value of $3,802,500 and the issuance of warrants to purchase up to 1,000,000 shares of common stock of the Company at an exercise price of $8.00 per share during a term of three years.

A summary of the purchase consideration follows:

---

| | |
|:---|:---|
| Cash paid | $1250000 |
| Share consideration issued at closing | 3802500 |
| Fair value of warrants issued at closing | 2750076 |
| Total purchase price consideration | $7802576 |

---

The allocation of assets acquired and liabilities assumed follows:

---

| | |
|:---|:---|
| Cash | $21074 |
| Receivables reserved for users | 27777 |
| Other receivables | 605898 |
| Prepaid expenses and other current assets | 413441 |
| Equipment | 70712 |
| Operating lease right-of-use asset | 373016 |
| Intangible assets | 7333536 |
| Goodwill | 4143224 |
| Other non-current assets | 1130034 |
| Accounts payable and accrued expenses | (2471244) |
| Liabilities to customers | (1737106) |
| Notes payable | (327390) |
| Operating lease liability | (240353) |
| Deferred income taxes | (1540043) |
| Total | $7802576 |

---

The acquired intangible assets, useful lives and a fair value at the acquisition date follows:

---

| | | |
|:---|:---|:---|
|  | **Useful Life (years)** | **Fair Value** |
| Tradename | 10 | $1440516 |
| Gaming licenses | 2 | 916692 |
| Player interface | 5 | 2226252 |
| Player relationships | 5 | 2750076 |
| Total |  | $7333536 |

---

The results of operations of Argyll are included in the consolidated financial statements of the Company for the year ended June 30, 2021 since the date of acquisition. During the year ended June 30, 2021, the Company recorded a measurement period adjustment to reduce the preliminary purchase consideration by $2,738,095 as the Company updated the fair value of the warrants issued using a Monte Carlo simulation. The Company also recorded a measurement period adjusted to update the preliminary purchase price allocation based on final allocation of fair value to identifiable intangible assets. The goodwill is not deductible for tax purposes. Transaction related expenses were immaterial for the year ended June 30, 2021.

***Acquisition of Flip***

On September 3, 2020 the Company acquired the software development operations of Flip Sports Limited ("FLIP") for cash of $100,000, share consideration of $411,817 resulting from the issuance 93,808 shares of common stock by the Company at the share price on the date of acquisition, and contingent share consideration payable based on the retention of certain key FLIP employees and having an estimated fair value of $500,000 on the date of acquisition. The contingent share consideration was settled on March 3, 2021 through the issuance of 93,808 shares of common stock have a market value on the date of settlement of $1,805,804, resulting in the recognition of $1,305,804 as the change in fair value of contingent consideration in the consolidated statement of operations for the year ended June 30, 2021.

A summary of the purchase consideration follows:

---

| | |
|:---|:---|
| Cash | $100000 |
| Share consideration issued at closing | 411817 |
| Contingent share consideration | 500000 |
| Total purchase price consideration | $1011817 |

---

The allocation to the assets acquired follows:

---

| | |
|:---|:---|
| Intangible assets (developed software) | $550000 |
| Goodwill | 461817 |
| Total purchase price consideration | $1011817 |

---

The developed software was determined to have an estimated useful life of 5 years. During the year ended June 30, 2021, the Company recorded a measurement period adjustment of $88,183 to reduce the amount of goodwill due to a decrease in the fair value of the purchase share consideration issued at closing. The following table summarizes the change in fair value of the FLIP contingent share consideration that was settled by the Company through the issuance of common stock:

---

| | |
|:---|:---|
| Fair value of contingent share consideration at September 3, 2020 | $500000 |
| Change in fair value contingent consideration | 1305804 |
| Stock issued settlement of contingent share consideration (March 3, 2021) | (1805804) |
| Fair value of contingent share consideration at June 30, 2021 | $— |

---

The results of operations of FLIP are included in the consolidated financial statements of the Company for the year ended June 30, 2021 since the date of acquisition. The goodwill recorded in the FLIP acquisition is deductible for tax purposes. Transaction related expenses for FLIP were not material to the consolidated statement of operations.

 

*Pro Forma Operating Results*

The following table summarizes pro forma results of operations for the year ended June 30, 2021 as if Bethard, as well as the fiscal year 2021 acquisitions of the Company completed during the year ended June 30, 2021, namely Argyll, Lucky Dino, EGL, GGC and Helix, had been acquired on July 1, 2020. The results of operations of FLIP acquired during the year ended June 30, 2021 were excluded from the pro forma presentation for the year ended June 30, 2021 due to immateriality. The results of operations of Bethard, as well as the previous acquisitions identified above, are included in the consolidated statement of operations of the Company for the year ended June 30, 2022, with any differences resulting from the acquisition of Bethard on July 13, 2021 assessed as immaterial.

The pro forma results of operations for the year ended June 30, 2021 were prepared for comparative purposes only and do not purport to be indicative of what would have occurred had these acquisitions been made as of July 1, 2020 and may not be useful in predicting the future results of operations for the Company. The actual results of operations may differ materially from the pro forma amounts included in the table below:

Schedule of Unaudited Pro Forma Operating Results

---

| | |
|:---|:---|
|  | **Unaudited**<br> **Pro Forma**<br> **for the year ended**<br> **June 30, 2021** |
| Net revenue | $62289822 |
| Net loss | $(41054763) |
| Net loss per common share, basic and diluted | $(2.23) |

---

The pro forma operating results of operations for the year ended June 30, 2021 are based on the individual historical results of the Company and the businesses acquired, with adjustments to give effect as if the acquisitions had occurred on July 1, 2020, after giving effect to certain adjustments including the amortization of intangible assets and depreciation of equipment resulting from the acquisitions.

**Note 4 – Other Receivables**

The components of other receivables follows:

Schedule of Other Receivables

---

| | | |
|:---|:---|:---|
|  | **June 30, 2022** | **June 30, 2021** |
| Marketing receivables from revenue partners | $- | $233725 |
| Receivable from revenue sharing arrangement |  | 137461 |
| Indirect taxes | 306040 | 135676 |
| Other | 66243 | 151883 |
| Other receivables | $372283 | $658745 |

---

**Note 5 – Prepaid Expenses and Other Current Assets**

The components of prepaid expenses and other current assets follows:

Schedule of Prepaid Expenses and Other Current Assets

---

| | | |
|:---|:---|:---|
|  | **June 30, 2022** | **June 30, 2021** |
| Prepaid marketing costs | $298300 | $1727669 |
| Prepaid insurance | 230404 | 175620 |
| Prepaid gaming costs | 575113 | 687866 |
| Accrued income | 110613 | 184707 |
| Other | 328623 | 488482 |
| Prepaid expenses and other current assets | $1543053 | $3264344 |

---

**Note 6 – Equipment**

The components of equipment follow:

Schedule of Equipment

---

| | | |
|:---|:---|:---|
|  | **June 30, 2022** | **June 30, 2021** |
| Computer equipment | $35911 | $258049 |
| Furniture and equipment | 34526 | 249070 |
| Leasehold improvements |  | 221787 |
| Finance lease asset | - | 117979 |
| Equipment, at cost | 70437 | 846885 |
| Accumulated depreciation and finance lease amortization | (26512) | (119943) |
| Equipment, net | $43925 | $726942 |

---

During the years ended June 30, 2022 and 2021, the Company recorded total depreciation expense and finance lease amortization of $154,464 and $111,380, respectively. Impairment of $653,107 for the Argyll computer equipment and furniture and equipment, EGL computer equipment and the Helix Game Centers computer equipment, furniture and equipment, leasehold improvements and finance lease assets was recorded in asset impairment charges in the consolidated statements of operations for the year ended June 30, 2022. There was no impairment in the year ended June 30, 2021.

**Note 7 – Goodwill and Intangible Assets**

A reconciliation of goodwill and accumulated goodwill impairment losses, by reportable segment, is as follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | EEG iGaming | EEG Games | Total |
| **Balance as of July 1, 2020** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Goodwill, net <sup>(1)</sup> | (1) | $- | $- | $- |
| &nbsp;&nbsp;&nbsp;Goodwill acquired during the year |  | 15146258 | 25818092 | 40964350 |
| Effects of foreign currency exchange rates |  | (37246) | 10266 | (26980) |
| **Balance as of June 30, 2021** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Goodwill, gross |  | 15109012 | 25828358 | 40937370 |
| &nbsp;&nbsp;&nbsp;Accumulated goodwill impairment charges |  | - | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill, net |  | 15109012 | 25828358 | 40937370 |
| Goodwill acquired during the year |  | 11292685 |  | 11292685 |
| Effects of foreign currency exchange rates |  | (2888340) | (93771) | (2982111) |
| Impairment charges |  | (3852876) | (23119755) | (26972631) |
| **Balance as of June 30, 2022** |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Goodwill, gross |  | 23513357 | 25734587 | 49247944 |
| &nbsp;&nbsp;&nbsp;Accumulated goodwill impairment charges |  | (3852876) | (23119755) | (26972631) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Goodwill, net |  | $19660481 | $2614832 | $22275313 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) As
 of July 1, 2020 the Company had not yet acquired any goodwill.

During the third quarter the Company concluded that goodwill impairment indicators existed based on the significant volatility in the Company's stock price where the Company experienced a sustained reduction from the middle of the quarter through March 31, 2022 and subsequently. As of March 31, 2022, the Company determined that in-person attendance at its Helix and customer game centers was not expected to attain levels previously forecasted and that under the current liquidity and investment constraints is the Company was less likely to reach the previously forecasted revenue and profits for EGL and GGC. These factors and the continuing impacts of the COVID-19 pandemic, and uncertainties caused by inflation and world stability, resulted in the Company evaluating its goodwill and long-lived assets, including intangible assets, for impairment as of March 31, 2022. The Company tests its goodwill for impairment annually on April 1. There was no further impairment identified as of the annual testing date from that recognized as of March 31, 2022. In the three months ending June 30, 2022, while implementing cost saving initiatives, and with the continuing liquidity and investment restraints and further reduction in the Company's already deflated stock price, the Company again concluded that as of June 30, 2022, goodwill impairment indicators existed, and the Company evaluated its goodwill and long-lived assets, including intangible assets, for further impairment as of the end of the fiscal year.

The Company performed its interim impairment tests on its long-lived assets, including its definite-lived intangible assets using an undiscounted cash flow analysis to determine if the cash flows expected to be generated by the asset groups over the estimated remaining useful life of the primary assets were sufficient to recover the carrying value of the asset groups, which were determined to be at the business component level. Based on the circumstances described above as of March 31, 2022, the Company determined its EGL, Helix, and GGC asset groups failed the undiscounted cash flow recoverability test and as of June 30, 2022 the Argyll asset group failed the undiscounted cash flow recoverability test. Accordingly, the Company estimated the fair value of its individual long-lived assets to determine if any asset impairment charges were present. The Company's estimation of the fair value of the definite-lived intangible assets included the use of discounted cash flow and cost analyses, reflecting estimates of future revenues, royalty rates, cash flows, discount rates, development costs and obsolescence. Based on these analyses, the Company concluded the fair values of certain intangible assets were lower than their current carrying values, and recognized impairment totaling $3,644,048 and $12,100,997 for the Argyll, EGL, GGC and Helix tradenames and developed technology and software, respectively, $1,675,580 for the Argyll and EGL player relationships, and $35,519 for the Argyll gaming licenses, totaling $17,456,144 for the year ended June 30, 2022 in asset impairment charges in the consolidated statements of operations.

In accordance with ASC 350, for goodwill, after considering the asset impairment charges to the asset groups, the Company performed its interim and annual goodwill impairment tests, which compared the estimated fair value of each reporting unit to its respective carrying values. The estimated fair value of each reporting unit was derived primarily by utilizing a discounted cash flows analysis. The results of the impairment tests performed indicated that the carrying value of the EGL, GGC and Helix reporting units exceeded their estimated fair values determined by the Company. Based on the results of the goodwill impairment testing procedures, the Company recognized impairments of goodwill of $1,895,164 for the EGL reporting unit, $8,831,000 for the GGC reporting unit, and $12,393,591 for the Helix reporting unit, for a total of $23,119,755 for the EEG Games segment, and $3,852,876 for the iGaming Argyll (UK) reporting unit of the EEG iGaming segment, totaling $26,972,631 for the year ended June 30, 2022 in asset impairment charges in the consolidated statements of operations. As of June 30, 2022, the Company determined there was no impairment related to the remaining $19,660,481 of goodwill in the iGaming Malta reporting unit and EEG iGaming segment and $2,614,832 of goodwill in the GGC reporting unit and EEG Games segment.

The assumptions used in the cost and undiscounted and discounted cash flow analyses require significant judgment, including judgment about appropriate growth rates, and the amount and timing of expected future cash flows. The Company's forecasted cash flows were based on the current assessment of the markets and were based on assumed growth rates expected as of the measurement date. The key assumptions used in the cash flows were revenue growth rates, operating expenses and gross margins and the discount rates in the discounted cash flows. The assumptions used consider the current early growth stage of the Company and the emergence from a period impacted by COVID-19. The industry markets are currently at volatile levels and future developments are difficult to predict. The Company believes that its procedures for estimating future cash flows for each reporting unit, asset group and intangible asset are reasonable and consistent with current market conditions as of the testing date. If the markets that impact the Company's business continue to deteriorate, the Company could recognize further goodwill and long-lived asset impairment charges.

In total, as described in detail above, the Company recorded $44,428,775 of goodwill and definite-lived intangible asset impairment charges for the year ended June 30, 2022.

There were no asset impairment charges for goodwill or long-lived assets, including definite-lived intangible assets, for the year ended June 30, 2021.

The table below reflects the adjusted gross carrying amounts for these intangible assets. The intangible amounts comprising the intangible asset balance are as follows:

Schedule of Intangible Assets

---

| | | | |
|:---|:---|:---|:---|
|  | **June 30, 2022** | **June 30, 2022** | **June 30, 2022** |
|  | **Gross Carrying Amount** | **Accumulated Amortization** | **Net Carrying Amount** |
| Tradenames | $5835512 | $(578960) | $5256552 |
| Developed technology and software | 10109366 | (1935018) | 8174348 |
| Gaming licenses | 1317567 | (774760) | 542807 |
| Player relationships | 20920029 | (4757813) | 16162216 |
| Internal-use software | 225086 | (14520) | 210566 |
| Total | $38407560 | $(8060653) | $30346489 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **June 30, 2021** | **June 30, 2021** | **June 30, 2021** |
|  | **Gross Carrying Amount** | **Accumulated Amortization** | **Net Carrying Amount** |
| Tradename | $7396804 | $(257018) | $7139786 |
| Developed technology and software | 25231659 | (1242605) | 23989054 |
| Gaming licenses | 1752612 | (573876) | 1178736 |
| Player relationships | 13956083 | (1253135) | 12702948 |
| Internal-use software | 777171 | (15140) | 762031 |
| Total | $49114329 | $(3341774) | $45772555 |

---

Amortization expense was $11,872,117 and $3,304,872 for the years ended June 30, 2022 and 2021, respectively. The amortization for EEG iGaming segment was $8,544,593 and $2,782,446, EEG Games segment was $3,192,236 and $421,593 and for the Other segment was $135,288 and $100,833, for the years ended June 30, 2022 and 2021, respectively.

The estimated future amortization related to definite-lived intangible assets is as follows:

Schedule of Future Amortization of Intangible Assets

---

| | |
|:---|:---|
| Fiscal 2023 | $7533227 |
| Fiscal 2024 | 6990001 |
| Fiscal 2025 | 6990001 |
| Fiscal 2026 | 5870261 |
| Fiscal 2027 | 665547 |
| Thereafter | 2297452 |
| Total | $30346489 |

---

**Note 8 – Other Non-Current Assets**

The components of other non-current assets follow:

Schedule of Other Non-Current Assets

---

| | | |
|:---|:---|:---|
|  | **June 30, 2022** | **June 30, 2021** |
| iGaming regulatory deposits | $1715053 | $755474 |
| iGaming deposits with service providers | 261825 | 434738 |
| Rent deposit | 80520 | 91253 |
| Other | 4778 | 33544 |
| Other non-current assets | $2062176 | $1315009 |

---

**Note 9 – Account Payable and Accrued Expenses**

The components of account payable and accrued expenses follow:

Schedule of Account Payable and Accrued Expenses

---

| | | |
|:---|:---|:---|
|  | **June 30, 2022** | **June 30, 2021** |
| Trade accounts payable | $5069616 | $2609212 |
| Accrued marketing | 2388987 | 1582470 |
| Accrued payroll and benefits | 833322 | 1093263 |
| Accrued gaming liabilities | 446626 | 758536 |
| Accrued professional fees | 555967 | 704748 |
| Accrued jackpot liabilities | 297970 | 432504 |
| Accrued other liabilities | 2751564 | 988082 |
| Accrued legal settlement (Note 13) | - | 289874 |
| Total | $12344052 | $8458689 |

---

**Note 10 – Related Party Transactions**

The Company reimburses the Chief Executive Officer for office rent and related expenses. The Company incurred charges owed to the Chief Executive Officer for office expense reimbursement of $4,800 for both years ended June 30, 2022 and 2021. As of June 30, 2022 and 2021, there were no amounts payable to the Chief Executive Officer.

On May 4, 2017, the Company entered into a services agreement and a referral agreement with Contact Advisory Services Ltd., an entity that is partly owned by a member of the Board of Directors. The Company incurred general and administrative expenses of $26,148 and $96,020 for years ended June 30, 2022 and 2021, respectively, in accordance with these agreements. As of June 30, 2022 and 2021, there were no amounts payable to Contact Advisory Services Ltd.

The Company retained services from a member of its Board of Directors through a consultancy agreement dated August 1, 2020 and an employment agreement dated June 15, 2020. The consultancy agreement required payments of £18,000 ($21,920 translated using the exchange rate in effect at June 30, 2022) per month to the firm that is controlled by this member of the Board of Directors. The individual also received payroll of $500 per month through the employment agreement as Chief Operating Officer. The member resigned from the Board of Directors and from his role as Chief Operating Officer on May 31, 2022 and the consultancy agreement and the employment agreement were terminated. The member remained as an advisor to the Company with an annual fee of $60,000.

The Company retained the services of its Chief Financial Officer through a consultancy agreement dated April 2, 2022 and an employment agreement dated April 2, 2022. The Company remits monthly payments to its Chief Financial Officer of NZD 36,995 ($23,524 translated using the exchange rate in effect at June 30, 2022) under the consultancy agreement and $500 per month under the employment agreement. In connection with this appointment the Company provided a one-time issuance of 200,000 shares of Common Stock to the Chief Financial Officer.

During the year ended June 30, 2022, the Company engaged in transactions with Tilt, LLC a game center operator controlled by the head of GGC. This included net sales Tilt, LLC in the amount of $222,559 for game center equipment, and amounts paid to Tilt, LLC of $33,600 for equipment leased, $16,589 for services, $20,128 for cryptocurrency mining and $140,000 for purchases of computer inventory.

**Note 11 – Leases**

The Company leases office and building space and equipment under operating lease agreements and equipment under finance lease agreements. The Company's lease agreements have terms not exceeding five years. Certain leases contain options to extend that are assessed by management at the commencement of the lease and are included in the lease term if the Company is reasonably certain of exercising. In July 2021, the Company commenced a lease for office space of approximately 284 square meters in Saint Julians, Malta over a 3-year lease term. The lease has an annual expense of €83,000, increasing 4% annually. At lease inception, the Company determined it was not reasonably certain to exercise any of the options to extend. In October 2021, the Company commenced a lease for building space of approximately 3,200 square feet at the University of California in Los Angeles over a 5-year lease term. The lease has an annual expense of $17,500, increasing 3% annually. At lease inception, the Company determined it was not reasonably certain to exercise any of the options to extend.

In March 2022 the Company commenced a finance lease for computer equipment for one of its owned and operated game centers. The lease had annual payments of $40,103 including 8% interest. The lease term was approximately 2.5 years. In June 2020 the Company commenced a finance lease for computer equipment for one of its owned and operated game centers. The lease had annual payments of $50,702 including 8% interest. The lease term was approximately 2.5 years. These game center computer equipment finance leases were disposed of during June 2022.

The consolidated balance sheet allocation of assets and liabilities related to operating and finance leases is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Consolidated Balance Sheet Caption** | **June 30, 2022** | **June 30, 2021** |
| **Assets:** |  |  |  |
| Operating lease assets | Operating lease right-of-use assets | $164288 | $1272920 |
| Finance lease assets | Equipment, net | - | 114540 |
| &nbsp;&nbsp;&nbsp;Total lease assets |  | $164288 | $1387460 |
| **Liabilities:** |  |  |  |
| Current: |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | Operating lease liability – current | $364269 | $414215 |
| Finance lease liabilities | Current portion of notes payable and other long-term debt |  | 50702 |
| Long-term: |  |  |  |
| Operating lease liabilities | Operating lease liability – non-current | 669286 | 878809 |
| Finance lease liabilities | Notes payable and other long-term debt |  | 63161 |
| Total lease liabilities |  | $1033555 | $1406887 |

---

The Company recognized in asset impairment charges in the consolidated statements of operations, $1,416,807 for operating lease right-of-use assets for the Helix Game Center building rentals and $175,858 for the Helix computer equipment finance leases. The operating lease expense and finance lease expense, excluding asset impairment charges, for the year ended June 30, 2022 were $356,395 and $33,398, respectively. The outstanding lease liabilities for the Helix equipment and finance leases were assumed by the purchaser in the Helix transaction on June 10, 2022. The operating lease expense and finance lease expense for the year ended June 30, 2021 were $156,543 and $2,039, respectively. The rent expense for short-term leases was not material to the consolidated financial statements.

Weighted average remaining lease terms and discount rates follow:

---

| | | |
|:---|:---|:---|
|  | **June 30, 2022** | **June 30, 2021** |
| **Weighted Average Remaining Lease Term (Years):** |  |  |
| &nbsp;&nbsp;&nbsp;Operating leases | 3.87 | 4.11 |
| &nbsp;&nbsp;&nbsp;Finance leases |  | 2.50 |
| **Weighted Average Discount Rate:** |  |  |
| &nbsp;&nbsp;&nbsp;Operating leases | 8.00% | 6.82% |
| &nbsp;&nbsp;&nbsp;Finance leases | -% | 8.00% |

---

The future minimum lease payments at June 30, 2022 follow:

---

| | |
|:---|:---|
|  | **Operating Lease** |
| Fiscal 2023 | $364269 |
| Fiscal 2024 | 311362 |
| Fiscal 2025 | 221167 |
| Fiscal 2026 | 227802 |
| Fiscal 2027 | 57368 |
| Thereafter | - |
| Total lease payments | 1181968 |
| Less: imputed interest | (148413) |
| Present value of lease liabilities | $1033555 |

---

**Note 12 – Long-term Debt**

**** 

**Notes Payable and other long-term debt**

The components of notes payable and other long-term debt follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | <br>**Maturity**  | **Interest Rate as of June 30, 2022** | **June 30, 2022** | **June 30, 2021** |
| Notes payable | April 30, 2023 | 3.49% | $139538 | $330654 |
| Finance lease obligation (Note 11) |  |  | - | 113863 |
| Total |  |  | 139538 | 444517 |
| Less current portion of notes payable and long-term debt |  |  | (139538) | (223217) |
| Notes payable and other long-term debt |  |  | $- | $221300 |

---

The Company assumed a note payable of £250,000 (equivalent to $327,390) in connection with its acquisition of Argyll on July 31, 2020. The term loan was issued on April 30, 2020 and has a maturity of 3 years, bears interest at 3.49% per annum over the Bank of England base rate, and is secured by the assets and equity of Argyll. The monthly principal and interest payments on the note payable commenced in June 2021 and continue through May 2023. The principal balance of the notes payable on June 30, 2022 was £114,583 ($139,538 using exchange rates at June 30, 2022). Interest expense on the note payable was $9,076 and $962 for the years ended June 30, 2022 and 2021, respectively. The finance lease obligations were assumed by the purchasers in the Helix transaction (see Note 11).

The maturities of long-term debt are as follows:

---

| | |
|:---|:---|
| Fiscal 2023 | $139538 |
| Total | $139538 |

---

**Senior Convertible Note**

On June 2, 2021, the Company, the Old Senior Convertible Note before it was exchanged for the New Note on February 22, 2022. The Old Senior Convertible Note was issued to the Holder in the principal amount of $35,000,000 with the Company receiving proceeds at issuance of $32,515,000, net of debt issuance costs of $2,485,000. The Old Senior Convertible Note would have matured on June 2, 2023, at which time the Company would have been required to repay the original principal balance and the Premium on Principal. The aggregate principal of the Old Senior Convertible Note repayable at maturity was $37,100,000 and the Old Senior Convertible Note accrued interest at rate of 8% per annum payable in cash monthly. The Old Senior Convertible Note was issued with 2,000,000 Series A Warrants and 2,000,000 Series B Warrants. On the date of issuance, the Company recorded the fair value of the Series A Warrants and Series B Warrants as a discount to the Old Senior Convertible Note totaling $26,680,000. The debt discount was being amortized to interest expense over the term of the Old Senior Convertible Note using the effective interest method. The obligation resulting from the issuance of the Series A Warrants and Series B Warrants was determined to qualify for liability classification on the consolidated balance sheet. See below for further discussion of the Series A Warrants and Series B Warrants.

The Old Senior Convertible Note was convertible, at the option of the Holder, into shares of the Company's Common Stock at a conversion price of $17.50 per share. The conversion amounts were calculated as the principal balance identified for conversion plus the Premium on Principal. At any time after issuance, the Company had the option, subject to certain conditions, to redeem some or all of outstanding principal, inclusive of any minimum return due to the Holder based on the number of days the principal was outstanding.

On February 22, 2022, the Company agreed to enter into an exchange agreement (the "Exchange Agreement") with the Holder whereby the Old Senior Convertible Note, with a remaining principal amount of $29,150,001, was exchanged for the New Note in the aggregate principal amount of $35,000,000. The increase in the principal balance outstanding of $5,849,999 was recognized as a loss on extinguishment of Senior Convertible Note in the second quarter ended December 31, 2021, and is included in the consolidated statements of operations for the year ended June 30, 2022. The Company further accelerated the recognition of the remaining debt discount and Premium on Principal in connection with the exchange and issuance of the New Note during the second quarter ended December 31, 2021, which is included in the loss on extinguishment of the Old Senior Convertible Note of $22,628,805 for the year ended June 30, 2022 in the consolidated statements of operations.

The interest rate on the Old Senior Convertible Note from June 2, 2022 through February 22, 2022, was 8.0% per annum, and remained unchanged in the New Note. From and after the occurrence and during the continuance of any Event of Default (as defined in the New Note), the interest rate shall automatically be increased to 12.0% per annum. As further described below, the Company was not in compliance with certain debt covenants under the Old Senior Convertible Note and New Note, but received a waiver from compliance through March 30, 2022. The Company was subject to begin accruing interest expense at a rate of 12% beginning March 31, 2022, as compared to using the set rate of 8.0%, and has recorded the additional $350,000 interest expense for the difference in rates in accounts payable and accrued expenses in the consolidated financial statements for the year ended June 30, 2022. The maturity date (the "Maturity Date") of the Exchange Agreement has remained unchanged in the Exchange Agreement and the New Note is due on June 2, 2023, subject to extension in certain circumstances, including bankruptcy and outstanding events of default. The ability of the Company to redeem the principal balance outstanding also remains unchanged. The Company may redeem the New Note, subject to certain conditions, at a price equal to 100% of the outstanding principal balance outstanding, together with accrued and unpaid interest and unpaid late charges thereon.

The New Note is convertible, at the option of the Holder, into shares of the Company's Common Stock at a conversion price of $17.50 per share. The New Note is subject to a most favored nations provision and standard adjustments in the event of any stock split, stock dividend, stock combination, recapitalization or other similar transaction. If the Company enters into any agreement to issue (or issues) any variable rate securities, the Holder has the additional right to substitute such variable price (or formula) for the conversion price.

If an Event of Default has occurred under the New Note, in addition to the default interest rate discussed above, the Holder may elect to alternatively convert the New Note at the Alternate Conversion Price (as defined in the New Note). In connection with an Event of Default, the Holder may require the Company to redeem in cash any or all of the New Note. The redemption price will equal 100% of the outstanding principal of the New Note to be redeemed, and accrued and unpaid interest and unpaid late charges thereon, or an amount equal to market value of the shares of the Company's Common Stock underlying the New Note, as determined in accordance with the New Note, if greater. The Holder will not have the right to convert any portion of a New Note, to the extent that, after giving effect to such conversion, the Holder (together with certain related parties) would beneficially own in excess of 4.99% of the shares of the Company's Common Stock outstanding immediately after giving effect to such conversion. The Holder may from time to time increase this limit to 9.99%, provided that any such increase will not be effective until the 61st day after delivery of a notice to the Company of such increase. The Company is currently in default and the Holder has not yet elected to alternatively convert.

In addition, unless approval of the Company's stockholders as required by the Nasdaq is obtained, the Company is prohibited from issuing any shares of Common Stock upon conversion of the New Note or otherwise pursuant to the terms of the New Note, if the issuance of such shares of Common Stock would exceed 19.99% of the Company's outstanding shares of Common Stock or otherwise exceed the aggregate number of shares of Common Stock which the Company may issue without breaching its obligations under the rules and regulations of Nasdaq. Should the Holder convert the principal balance outstanding at June 30, 2022 at the Alternate Conversion Price that is currently available to the Holder, or a portion of the principal balance, the Company may be subject to remit amounts to the Holder materially in excess of the principal balance outstanding through payment of cash. Refer to the Alternate Conversion discussion below for further information of this settlement option available to the Holder.

In connection with a Change of Control (as defined in the New Note), the Holder may require the Company to redeem all or any portion of the New Note. The redemption price per share will equal the greatest of (i) 115% of the outstanding principal of the New Note to be redeemed, and accrued and unpaid interest and unpaid late charges thereon, (ii) 115% of the market value of the shares of the Company's Common Stock underlying the New Note, as determined in accordance with the New Note, and (iii) 115% of the aggregate cash consideration that would have been payable in respect of the shares of the Company's Common Stock underlying the New Note, as determined in accordance with the New Note.

At any time after the date the Company provides notice to the Holder of the Company incurring additional debt, the Holder will have the right to have the Company redeem all or a portion of the New Note at a redemption price of 100% of the portion of the New Note subject to redemption.

Under the New Note, and consistent with the Old Senior Convertible Note, the Company is subject to certain customary affirmative and negative covenants regarding the incurrence of indebtedness, the existence of liens, the repayment of indebtedness, the payment of cash in respect of dividends, distributions or redemptions, and the transfer of assets, among other matters. The Company is also subject to certain financial debt covenants relating to available cash, minimum annual revenues, ratio of debt to market capitalization and minimum cash flow.

The New Note is subject to a most favored nation provision and standard adjustments in the event of any stock split, stock dividend, stock combination, recapitalization or other similar transaction. If the Company enters into any agreement to issue, or issue any variable rate securities, the Holder of the New Note has the additional right to substitute such variable price (or formula) for the conversion price. If the Holder were to substitute a floor price of $2.1832 ("Conversion Floor Price") as the variable price, the Company would be required to settle in cash any difference between the market value of the shares subject to conversion at the floor price and the market value of the shares using the variable price, excluding any reference to the floor. The Holder of the Senior Convertible Note also has the right to have the Company redeem all or a portion of the New Note should the Company provide notice of incurring additional debt.

If an Event of Default occurs, the Holder of the Senior Convertible Note has the right to alternate conversion ("Alternate Conversion") and may elect to convert the Senior Convertible Note, inclusive of a 15% premium payable ("Incremental Premium") in cash due upon such an acceleration of the applicable principal, at a price ("Alternate Conversion Price") equal to the greater of the Conversion Floor Price of $2.1832 or a price derived from the volume weighted average price of the Company's Common Stock at the time of Alternate Conversion. If the Alternate Conversion were to include the Conversion Floor Price of $2.1832 as the Alternate Conversion Price, the Company would be required to settle in cash any difference between the market value of the shares subject to the Alternate Conversion using the floor price and the market value of the shares using the Alternate Conversion Price, excluding any reference to the floor. The Company is currently in default and the Holder has not yet elected to alternatively convert. See further discussion in make-whole derivative liability below.

As discussed above, during the three months ended December 31, 2021, the Company had not maintained compliance with the covenants of the Senior Convertible Note, having identified non-compliance with the same financial debt covenants previously identified at September 30, 2021. The Company obtained a waiver from the compliance with certain covenants, as of December 31, 2021 and through March 30, 2022. The Company further entered into a non-binding term sheet dated February 22, 2022, to restructure the New Note to mitigate the risk of default on the covenants in future periods. This term sheet expired without a new debt facility being completed. Since the expiration of the waiver on March 30, 2022, the Company is not in compliance with its covenants. At June 30, 2022, the Company is in default under the terms of the Senior Convertible Note. The Senior Convertible Note matures in less than 12 months from June 30, 2022, and the Company has continued to recognize its obligation under the Senior Convertible Note as a current liability in the consolidated balance sheet. The Company has not remitted payment to the Holder of the Senior Convertible Note an amount equal to 30% of the gross proceeds from the March 2022 Offering to be applied as a reduction of principal (see Note 16).

The Company previously determined that it had not maintained compliance with its Senior Convertible Note covenants at September 30, 2021. The Company therefore requested and received a waiver dated October 13, 2021 for (i) any known breaches or potential breaches of financial debt covenants in effect related to the available cash test and minimum cash flow test through December 25, 2021, (ii) any known breach resulting from the placement of a lien on the outstanding share capital of Prozone Limited, the entity that holds the assets of Bethard through the Additional Payment Due Date (see Note 3 for discussion of the Bethard acquisition) and (iii) any known breach which would result from the Company's announcement that it would purchase an equity interest in Game Fund Partners Group LLC through the contribution of up to 200,000 shares of Common Stock. In addition, the Company requested and received an amendment to the Senior Convertible Note wherein the permitted ratio of outstanding debt to market capitalization was increased temporarily from 25% to 35% through December 25, 2021.

In consideration for the October 13, 2021 waiver, the Company agreed to permit the conversion of up to $7,500,000 of the original principal balance of the Senior Convertible Note at the Alternate Conversion Price into shares of Common Stock, exclusive of the Premium on Principal and Incremental Premium that applies to an Alternate Conversion. During the year ended June 30, 2022, the Holder of the Senior Convertible Note had converted the full principal amount of $7,500,000 into 2,514,459 shares of Common Stock. As a result of these conversions of principal, the Company recorded a loss on conversion of senior convertible note of $5,999,662 in the consolidated statement of operations for the year ended June 30, 2022. The loss on conversion included accelerated amortization of the debt discount of $4,515,273, accelerated amortization of the Premium on Principal of $288,300 and the Incremental Premium due on conversion of $1,196,089.

The Company also previously obtained a waiver from the Holder of the Old Senior Convertible Note on November 2, 2021 in connection with its announcement to commence an underwritten registered public offering of its 10.0% Series A Cumulative Redeemable Convertible Preferred Stock (see Note 15). In consideration for this waiver, the Company agreed to increase the cash price payable upon a redemption of the Old Senior Convertible Note by the Company to be equal to 10% of the conversion amount, as defined in Old Senior Convertible Note agreement as any unpaid principal, minimum return due to the Holder, and unpaid interest due on such redemption date. The Company agreed to pay the Holder of the Old Senior Convertible Note an amount of $1,500,000 under the terms of a registration rights agreement. The Company recognized the amount payable to the Holder of the Old Senior Convertible Note under the registration rights agreement in other non-operating income (loss), net, in the consolidated statement of operations for the year ended June 30, 2022 and in accounts payable and accrued expenses at June 30, 2022 on the consolidated balance sheet.

**Make-Whole Derivative Liability**

The New Note agreement includes provision that should both the Company be in breach of its debt covenants and its price per common share trade below the Conversion Floor Price of $2.1832, the Holder may elect the Alternate Conversion option that includes a make-whole provision payable to the Holder in cash. At June 30, 2022, both the Company was in breach of its debt covenants and the price per share of its Common Stock had declined below the Conversion Floor Price. While the Company previously obtained waivers from the Holder of the Old Senior Convertible Note for breach of covenants, as well as a waiver for breach of covenants through March 30, 2022 under the New Note, the Company was unable to comply with the debt covenants under the New Note or otherwise obtain a debt waiver from March 31, 2022 through the year ended June 30, 2022 and subsequent to year end. As a result, the make-whole provision in the New Note agreement was determined to represent an obligation of the Company at June 30, 2022 under the terms of the New Note.

The make-whole provision in the New Note is a derivative liability. The Company's obligation to make a payment under the make-whole provision was previously assessed as remote with an immaterial fair value. This considered that the Company had obtained debt waivers from the Holder for its breaches of debt covenants. The Company's historical stock price had also traded at levels significantly in excess of the Conversion Floor Price. Further, the Company had further signed a non-binding term sheet on February 22, 2022 (in combination with entering into the New Note) for the purpose of revising the debt covenants that were to be included in a revised or amended note agreement. At June 30, 2022, the Company has been unable to complete an agreement to restructure the terms and covenants of the New Note. The stock price further continued to trade materially below the Conversion Floor Price and the Company has also been unable to secure a debt waiver. The fair value of the derivative liability at June 30, 2022 was determined using a Monte Carlo valuation model. See Note 18 for further discussion of the fair value determined for the derivative liability.

At June 30, 2022, the Company estimates that it would be required to issue up to 16,031,513 shares of Common Stock under the Alternate Conversion provisions of the New Note. The Company further estimated the derivative liability to the holder to be $9,399,620 which is included in the derivative liability in the consolidated balance sheets and the expense was recorded in the change in fair value of derivative liability in the consolidated statements of operations. The make-whole liability calculated under the terms of the note of approximately $180,000,000 was materially higher than the fair value of $9,399,620 determined at June 30, 2022 and considers the difference in the market price of the Company's shares and a floor price of $2.1832 multiplied by a number of shares that is based on the outstanding principal and the market price of the Company's Common Stock at June 30, 2022. The calculated make-whole liability may differ materially from the amount at which the Company may be required to pay under the New Note. The Company has held non-binding discussions with the Holder to restructure its obligation under the New Note. However, there can be no guarantee that the Company will be able to reach an agreement to restructure the New Note.

**Warrants**

**March 2022 Warrants and April 2022 Overallotment Warrants**

On March 2, 2022, the Company completed the March 2022 Offering, an equity offering in which it sold 15,000,000 units at $1.00 consisting of one share of Common Stock and one warrant for a total of 15,000,000 March 2022 Warrants with an exercise price of $1.00. The Company also sold a further 2,250,000 April 2022 Overallotment Warrants with an exercise price of $1.00 issued to the underwriters of the offering on April 1, 2022.

The March 2022 Warrants and April 2022 Overallotment Warrants may be exercised at any time after issuance for one share of Common Stock of the Company at an exercise price of $1.00. The March 2022 Warrants and April 2022 Overallotment Warrants are callable by the Company should the volume weighted average share price of the Company exceed $3.00 for each of 20 consecutive trading days following the date such warrants become eligible for exercise. The March 2022 Warrants and April 2022 Overallotment Warrants also contain a beneficial ownership limitation of 4.99% which may be increased up to 9.99%, provided that any such increase will not be effective until the 61st day after delivery of a notice to the Company of such increase.

The Company determined the March 2022 Warrants and April 2022 Overallotment Warrants should be classified as a liability as the warrants are redeemable for cash in the event of a fundamental transaction, as defined in the Common Stock Purchase Warrant Agreement [pursuant to which the March 2022 Warrants and April 2022 Overallotment Warrants were purchased], which includes a change in control. The Company has recorded a liability for the March 2022 Warrants at fair value on the issuance date with subsequent changes in fair value reflected in earnings. At March 2, 2022, the date of the Common Stock issuance, the Company determined the total fair value of the March 2022 Warrants to be $9,553,500 and on the date of the Common Stock issuance, the Company determined the total fair value of the April 2022 Overallotment Warrants to be $607,500. At June 30, 2022, the Company determined the total fair value of the March 2022 Warrants and April 2022 Overallotment Warrants to be $2,070,000. The change in fair value of the March 2022 Warrants and April 2022 Overallotment Warrants liability recorded in the consolidated statement of operations for the year ended June 30, 2022 was $8,091,000. See Note 18 for additional disclosures related to the change in the fair value of the warrant liabilities.

**Series A and Series B Warrants**

The Company issued 2,000,000 Series A Warrants and 2,000,000 Series B Warrants to the holder of the Old Senior Convertible Note. The Exchange Agreement did not impact the Series A Warrants and Series B Warrants previously issued and outstanding. The Series A Warrants may be exercised at any time after issuance for one share of Common Stock of the Company at an exercise price of $17.50. The Series B Warrants may only be exercised to the extent that the indebtedness owing under the Senior Convertible Note is redeemed. As a result, for each share of Common Stock determined to be issuable upon a redemption of principal of the Senior Convertible Note, one Series B Warrant will vest and be eligible for exercise at an exercise price of $17.50. The Series A Warrants and Series B Warrants are callable by the Company should the volume weighted average share price of the Company exceed $32.50 for each of 30 consecutive trading days following the date such warrants become eligible for exercise. The Series A Warrants and Series B Warrants also contain a beneficial ownership limitation of 4.99% which may be increased up to 9.99%, provided that any such increase will not be effective until the 61st day after delivery of a notice to the Company of such increase.

The Company determined the Series A and Series B Warrants should be classified as a liability as the warrants are redeemable for cash in the event of a fundamental transaction, as defined in the Senior Convertible Note, which includes a change in control. The Company has recorded a liability for the Series A Warrants and Series B Warrants at fair value on the issuance date with subsequent changes in fair value reflected in earnings. At June 30, 2021, the Company determined the total fair value of the Series A Warrants and Series B Warrants to be $23,500,000, with a fair value of $13,600,000 determined for the Series A Warrants and a fair value of $9,900,000 determined for the Series B Warrants. At June 30, 2022, the Company determined the total fair value of the Series A Warrants and Series B Warrants to be $122,730 with a fair value of $117,340 determined for the Series A Warrants and a fair value of $5,390 determined for the Series B Warrants. The change in fair value of the Series A Warrants and Series B Warrants liability recorded in the consolidated statements of operations for the year ended June 30, 2022 and 2021 were a decrease of $23,377,270 and an increase of $1,549,924, respectively. See Note 18 for additional disclosures related to the change in the fair value of the warrant liabilities.

The proceeds from the issuance of the Old Senior Convertible Note were allocated to the Series A Warrants and Series B Warrants using the with-and-without method. Under this method, the Company first allocated the proceeds from the issuance of the Old Senior Convertible Note to the Series A Warrants and Series B Warrants based on their initial fair value measurement, and then allocated the remaining proceeds to the Old Senior Convertible Note. The debt discount on the Old Senior Convertible Note was being amortized over its term of two years. The Company accelerated the amortization of the debt discount on the Old Senior Convertible Note during the second quarter resulting in the Company recording of a loss on extinguishment of $22,628,805 for the year ended June 30, 2022, as further described above. Prior to accelerating the amortization of debt discount in the second quarter, the Company recorded the remaining amortization of the debt discount of $2,262,112 as interest expense on the consolidated statement of operations for the year ended June 30, 2022.

**Components of Long-Term Debt, including Senior Convertible Note**

The components of the Company's long-term debt including the Senior Convertible Note on the consolidated balance sheets follows:

---

| | | |
|:---|:---|:---|
|  | **June 30, 2022** | **June 30, 2021** |
| Current portion of notes payable and long-term debt including the senior convertible note | $35139538 | $223217 |
| Notes payable and long-term debt including the senior convertible note | - | 6523804 |
| Total | 35139538 | 6747021 |

---

**Note 13 – Commitments and contingencies**

**Commitments**

On October 1, 2019, the Company entered into a sponsorship agreement with an eSports team (the "Team") to obtain certain sponsorship-related rights and benefits that include the ability to access commercial opportunities. The Company had agreed to initially pay the Team $516,000 in cash and $230,000 in Common Stock during the period from October 1, 2019 to June 30, 2022. On August 6, 2020, the Company entered into an amended and restated sponsorship agreement (the "Amended Sponsorship Agreement") with the Team that included cash payments totaling $2,545,000 and the issuance of Common Stock totaling $825,000 for the term of the agreement ending January 31, 2023. On December 31, 2021, the Amended Sponsorship Agreement terminated, and no cash or Common Stock was paid subsequently during the six months ended June 30, 2022. For the year ended June 30, 2022, the Company recorded $444,304 in sales and marketing expense related to the Team sponsorship. There were no outstanding amounts payable to the Team as of June 30, 2022.

On August 17, 2020, the Company entered into an agreement with Bally's Corporation, an operator of various online gaming and wagering services in the state of New Jersey, USA, to assist the Company in its entrance into the sports wagering market in New Jersey under the State Gaming Law. The commencement date of the arrangement with Bally's was March 31, 2021. The Company paid $1,550,000 and issued 50,000 shares of Common Stock in connection with the commencement of the arrangement. The Bally's agreement extends for 10 years from July 1, 2021, the date of commencement, requiring the Company to pay $1,250,000 and issue 10,000 shares of Common Stock on each annual anniversary date. As of June 30, 2022, the future annual commitments by the Company under this agreement are estimated at $1,250,000 and 10,000 shares of Common Stock payable each year through the year ended June 30, 2030. During the year ended June 30, 2022 and 2021, the Company has recorded $1,358,168 and $357,167, respectively, in sales and marketing expense for its arrangement with Bally's Corporation. There were no outstanding amounts payable to Bally's Corporation as of June 30, 2022 or June 30, 2021.

The Company has signed a subscription and operating agreement with Game Fund Partners LLC to support the development of a planned $300,000,000 game fund. Under the agreements, the Company will initially invest approximately $2,000,000 of Company shares into 20% of the general partnership of the fund, and the Company will become part of the management and investment committee that manages an investment fund focused on joint projects and investment vehicles to fuel growth in the areas of gaming, data, blockchain, online gaming, and joint casino hotel investments. The Company has agreed to contribute 100,000 shares to the fund during the period in which the fund receives total capital commitments of $100,000,000. The Company has agreed to contribute an additional 100,000 shares to the fund during the period in which the fund reaches total capital commitments of $200,000,000. As of June 30, 2022, the Company has not contributed any shares of its Common Stock to the fund.

In the ordinary course of business, the Company enters into multi-year agreements to purchase sponsorships with professional teams as part of its marketing efforts to expand competitive esports gaming. As of June 30, 2022, the commitments under these agreements are estimated at $2,319,014 for the year ended June 30, 2023, $1,363,797 for the year ended June 30, 2024, $494,980 for year ended June 30, 2025, and $290,663 for the year ended June 30, 2026.

**Contingencies**

Since the acquisition of the Argyll iGaming business on July 31, 2020, the Company has been responding to periodic requests for information from the UKGC in relation to information required to maintain its UK license following the change of corporate control. The Company continues to operate in the UK market and there have been no adverse judgments imposed by the UKGC against the Company.

On January 1, 2022, amendments to the Finnish Lotteries Act came into effect, further restricting marketing opportunities and enhancing the enforcement powers of the Finnish regulator. Prior to these amendments coming into effect, in the fiscal quarter ended December 31, 2021, the Company received a communication from the Finnish regulator requesting clarification on its marketing and gaming practices related to its Finnish iGaming operations. The Company responded to the communication in Q3 of fiscal year 2022 and changed its business operations in Finland as of the fiscal quarter ended June 30, 2022 as part of its response.

Further powers allowing the Finnish regulator to require blocking by payment service providers of overseas operators who are targeting their marketing activities towards Finnish customers are also expected to come into effect in the calendar year starting January 1, 2023. The Company believes that the changes that it has made to its business operations in Finland will allow it to avoid being adversely affected by the Finnish regulator's new powers.

The Company at times may be involved in pending or threatened litigation relating to claims arising from its operations in the normal course of business. Some of these proceedings may result in fines, penalties, judgments or costs being assessed against the Company at some future time.

In determining the appropriate level of specific liabilities, if any, the Company considers a case-by-case evaluation of the underlying data and updates the Company's evaluation as further information becomes known. Specific liabilities are provided for loss contingencies to the extent the Company concludes that a loss is both probable and estimable. The Company did not have any liabilities recorded as of June 30, 2022. However, the results of litigation are inherently unpredictable, and the possibility exists that the ultimate resolution of one or more of these matters could result in a material effect on the Company's financial position, results of operations or liquidity.

In September 2018, Boustead Securities, LLC ("Boustead") notified the Company of a claim that it was owed $192,664, as well as warrants to purchase 1,417,909 shares of the Company's Common Stock as compensation for Boustead acting as the placement agent for the sale of the Company's securities between June 2017 and 2018. This matter was brought to arbitration on December 7, 2020. On February 3, 2021, the arbitration awarded Boustead $289,874 in damages and allowable costs (excluding attorneys' fees) with interest accruing approximately $21 per day. At June 30, 2021, the Company had recorded a liability for the amount awarded in arbitration in accounts payable and accrued expenses in the consolidated balance sheet. The Company paid $294,051 to settle the arbitration award, inclusive of accrued interest, on August 24, 2021.

On August 3, 2020, Tangiers Global, LLC ("Tangiers") filed a lawsuit against the Company alleging that it had breached its obligations related to an 8% convertible promissory note dated June 3, 2016 and common stock purchase warrants of the same date. On April 30, 2021, a Settlement Agreement was entered into with Tangiers for an undisclosed amount. The Company has settled and paid the liability and the amount of the settlement was not material to the consolidated financial statements of the Company.

Other than discussed above, the Company is currently not involved in any other litigation that it believes could have a material adverse effect on the Company's financial condition or results of operations.

**Note 14 – Revenue and Geographic Information**

The Company is a provider of iGaming, traditional sports betting and esports services that commenced revenue generating operations during the year ended June 30, 2021 with the acquisitions of Argyll, FLIP, EGL, Lucky Dino, GGC and Helix. The Company acquired Bethard in July 2021 adding to its revenue generating operations. The revenues and long-lived assets of Argyll, EGL Lucky Dino and Bethard have been identified as the international operations as they principally service customers in Europe, inclusive of the United Kingdom. The revenues and long-lived assets of FLIP, GGC and Helix (until June 10, 2022 when the Helix Game Centers were disposed) principally service customers in the United States.

A disaggregation of revenue by type of service for the year ended June 30, 2022 and 2021 is as follows:

---

| | | |
|:---|:---|:---|
|  | **Year ended June 30,** | **Year ended June 30,** |
|  | **2022** | **2021** |
| Online betting and casino revenues | $53104795 | $16231028 |
| Esports and other revenues | 5246855 | 552886 |
| Total | $58351650 | $16783914 |

---

A summary of revenue by geography follows for the year ended June 30, 2022 and 2021 is as follows:

---

| | | |
|:---|:---|:---|
|  | **June 30, 2022** | **June 30, 2021** |
| United States | $4799084 | $671519 |
| International | 53552566 | 16112395 |
| Total | $58351650 | $16783914 |

---

A summary of long-lived assets by geography as at June 30, 2022 and 2021 follows:

---

| | | |
|:---|:---|:---|
|  | **June 30, 2022** | **June 30, 2021** |
| United States | $8271360 | $48081926 |
| International | 46620831 | 41942870 |
| Total | $54892191 | $90024796 |

---

**Note 15 – 10% Series A Cumulative Redeemable Convertible Preferred Stock**

The Company is authorized to issue 10,000,000 shares of preferred stock. On November 10, 2021, the Company designated 1,725,000 shares of preferred stock as 10% Series A Cumulative Redeemable Convertible Preferred Stock ("10% Series A Cumulative Redeemable Convertible Preferred Stock"), with a par value of $0.001 per share and liquidation value of $11.00. On November 11, 2021, the Company announced that it priced an underwritten public offering of preferred stock as 10% Series A Cumulative Redeemable Convertible Preferred Stock in the first series issuance of preferred stock, of which 800,000 shares were issued at $10 a share on November 16, 2021 for total gross proceeds of $8,000,000, before deducting underwriting discounts and other estimated offering expenses. Net proceeds from the sale, after deducting issuance costs totaled $7,265,000.

In addition, under the terms of the underwriting agreement for the public offering of the 10% Series A Cumulative Redeemable Convertible Preferred Stock, the Company granted the underwriters a 45-day option to purchase up to an additional 120,000 shares. On December 10, 2021, there was a partial exercise to purchase 35,950 shares. Net proceeds from the additional sale, after deducting issuance costs, totaled $334,335.

**Conversion**

Each share of 10% Series A Cumulative Redeemable Convertible Preferred Stock is convertible into one share of the Company's Common Stock at a conversion price of $17.50 per common share. Subject to earlier conversion or redemption, the 10% Series A Cumulative Redeemable Convertible Preferred Stock matures five years from issuance, or November 15, 2026, at which point the Company must redeem the shares of 10% Series A Cumulative Redeemable Convertible Preferred Stock in cash.

**Dividends**

Dividends on the 10% Series A Cumulative Redeemable Convertible Preferred Stock accrue daily and are cumulative from the date of issuance. The dividends on the 10% Series A Cumulative Redeemable Convertible Preferred Stock are payable monthly in arrears on the last day of each calendar month, when, as and if declared by the Company's Board of Directors, at the rate of 10.0% per annum. In the event the dividends are not paid in cash, the dividends shall continue to accrue at a dividend rate of 10.0%.

**Redemption and Liquidation**

The 10% Series A Cumulative Redeemable Convertible Preferred Stock is also redeemable, at the option of the Board of Directors, in whole or in part, at any time on or after January 1, 2023.

The 10% Series A Cumulative Redeemable Convertible Preferred Stock includes a change of control put option which allows the holders of the 10% Series A Cumulative Redeemable Convertible Preferred Stock to require the Company to repurchase such holders' shares in cash in an amount equal to the initial purchase price plus accrued dividends.

The 10% Series A Cumulative Redeemable Convertible Preferred Stock is contingently redeemable upon certain deemed liquidation events, such as a change in control. Because a deemed liquidation event could constitute a redemption event outside of the Company's control, all shares of preferred stock have been presented outside of permanent equity in mezzanine equity on the consolidated balance sheets. The instrument is initially recognized at fair value net of issuance costs. The Company reassesses whether the 10% Series A Cumulative Redeemable Convertible Preferred Stock is currently redeemable, or probable to become redeemable in the future, as of each reporting date. If the instrument meets either of these criteria, the Company will accrete the carrying value to the redemption value. The 10% Series A Cumulative Redeemable Convertible Preferred Stock has not been adjusted to its redemption amount as of June 30, 2022 because a deemed liquidation event is not considered probable.

The 10% Series A Cumulative Redeemable Convertible Preferred Stock is not mandatorily redeemable, but rather is only contingently redeemable, and given that the redemption events are not certain to occur, the shares have not been accounted for as a liability. As the 10% Series A Cumulative Redeemable Convertible Preferred Stock is contingently redeemable on events outside of the control of the Company, all shares of 10% Series A Cumulative Redeemable Convertible Preferred Stock have been presented outside of permanent equity in mezzanine equity on the consolidated balance sheets.

**Voting Rights**

The holders of the 10% Series A Cumulative Redeemable Convertible Preferred Stock will not have any voting rights, except whenever dividends on any share of any series of preferred stock ("Applicable Preferred Stock") have not been paid in an aggregate amount equal to four monthly dividends on the shares, the holders of the Applicable Preferred Stock will have the exclusive and special right, voting separately as a class and without regard to series, to elect at an annual meeting of shareholders or special meeting held in place of it one member of the Board of Directors, until all arrearages in dividends and dividends in full for the current monthly period have been paid.

**Note 16 – Equity**

**Common Stock**

The authorized capital stock of the Company consists of 500,000,000 shares of Common Stock at a par value of $0.001 per share.

*Dividend Rights*

Subject to the prior or equal rights of holders of all classes of stock at the time outstanding having prior or equal rights as to dividends, the holders of the Company's Common Stock may receive dividends out of funds legally available if the Board of Directors, in its discretion, determines to issue dividends and then only at the times and in the amounts that the Board of Directors may determine. The Company has not paid any dividends on the Company's Common Stock and do not contemplate doing so in the foreseeable future.

*Voting Rights*

Each holder of the Common Stock is entitled to one vote for each share of Common Stock held by such stockholder.

*No Preemptive or Similar Rights*

The Company's Common Stock is not entitled to preemptive rights, and is not subject to conversion, redemption or sinking fund provisions.

*Liquidation*

In the event of a liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the Common Stock.

The following is a summary of Common Stock issuances for the year ended June 30, 2022:

● During
 the year ended June 30, 2022, as part of the March 2022 Offering, the Company sold 15,000,000 units at $1.00 ,
 consisting of one share of Common Stock and one warrant with an exercise price of $1.00 ,
 for gross proceeds of $15,020,925 .
 The Company recorded the issuance of these shares at a fair value of $3,449,925 comprised of $13,625,925 of cash received from the offering equal
 to the gross proceeds, net of $1,395,000 issuance costs, and net of the fair value
 of the March 2022 Warrant liability of $9,553,500 and the April 2022 Overallotment Warrants
 liability of $607,500 ,
 respectively, calculated on issuance. The proceeds from the offering were designated for general working capital and to pay to the
 Holder of the Senior Convertible Note an amount equal to 30% of the gross proceeds to be applied as a reduction of principal (see
 Note 12). At June 30, 2022 the Company has not remitted payment to the Holder and principal remains at $35,000,000 .

● During
 the year ended June 30, 2022, the Company issued 332,527 shares of Common Stock for services with
 a weighted average fair value of $2.25 per share or $748,149 in the aggregate.

● During
 the year ended June 30, 2022, the Company issued 14,000 shares of Common Stock from the exercise
 of stock options with a weighted average exercise price of $4.82 per share or $67,479 in the aggregate.

● During
 the year ended June 30, 2022, the Company issued 1,165,813 shares of Common Stock, with aggregate proceeds
 of $4,005,267 ,
 or $3,885,109 net of issuance costs, and a weighted average
 exercise price of $3.44 ,
 under its ATM program (see below).

● During
 the year ended June 30, 2022, the holder of the Senior Convertible Note converted an aggregate conversion value of $10,652,648 into 2,514,459 shares of Common Stock, with a weighted average
 conversion price of $4.24 .

The following is a summary of Common Stock issuances for the year ended June 30, 2021:

● On
 February 11, 2021, the Company entered into a Securities Purchase Agreement (the "Purchase Agreement") with certain investors
 resulting in the raise of $30,000,000 in gross proceeds for the Company. Pursuant
 to the terms of the Purchase Agreement, the Company agreed to sell, in a registered direct offering, an aggregate of 2,000,000 shares (the "Shares") of the
 Company's Common Stock, par value $0.001 per share at a price of $15.00 per Share. The offering was consummated on
 February 16, 2021, at which time the Company received net proceeds of $27,340,000 .

● On
 July 31, 2020, the Company issued 650,000 shares of Common Stock as a component of
 the purchase consideration for Argyll. The Company recorded the issuance of these shares at fair value in the amount of $3,802,500 .
 During the year ended June 30, 2021, the Company also issued 1,000,000 shares of Common Stock in connection with
 the exercise of warrants that were included as a component of the purchase consideration paid for Argyll. The warrants entitled the
 holder to purchase one share of Common Stock at $8.00 per share. The Company recorded the issuance
 of these shares at the settlement date fair value of $15,480,000 comprised of $8,000,000 of cash received from the exercise, and non-cash
 settlement of the warrant liability totaling $7,480,000 .
 The warrant liability established on the date of acquisition of Argyll was $2,750,076 and subsequently increased to the settlement
 date fair value by recording a charge of $4,729,924 in the statement of operations for the year
 ended June 30, 2021. Refer to discussion of the Argyll acquisition at Note 3.

&nbsp;&nbsp;&nbsp;&nbsp;● During
 the year ended June 30, 2021, the Company issued a total of 187,616 shares of Common Stock as a component of
 the purchase consideration for FLIP, inclusive of share consideration paid to settle a portion of the purchase consideration that
 was recorded as a contingent liability. The Company recorded the issuances of these shares at a total fair value of $2,217,621 ,
 which includes the initial issuance of 93,808 shares of Common Stock at a fair value of
 $411,817 on September 3, 2020, and the subsequent
 issuance of 93,808 shares of Common Stock on March 3, 2021 at
 a fair value of $1,805,804 in settlement of contingent purchase consideration.
 Refer to discussion of the FLIP acquisition at Note 3.

● On
 January 21, 2021, the Company issued 292,511 shares of Common Stock as a component of
 the purchase consideration for EGL. The Company recorded the issuance of these shares at fair value in the amount of $2,193,833 .
 On May 21, 2021, the Company issued an additional 63,109 shares of Common Stock with a fair value
 of $597,650 to settle contingent holdback purchase consideration
 for the EGL acquisition. Refer to discussion of the EGL acquisition at Note 3.

● On
 June 1, 2021, the Company issued 830,189 shares of Common Stock with a fair value
 of $9,273,211 in connection with the acquisition of GGC.

● On
 June 1, 2021, the Company issued 528,302 shares of Common Stock with a fair value
 of $5,901,133 in connection with the acquisition of Helix
 Holdings, LLC.

● During
 the year ended June 30, 2021, the Company issued 5,503,167 shares of Common Stock for the exercise of
 warrants with a weighted average exercise price of $4.86 per share or $26,737,849 in the aggregate. The warrants issued for
 shares of Common Stock in the statement of stockholders' equity (deficit) also includes the cash received of $8,000,000 from the exercise of warrants issued in the
 acquisition of Argyll, and the non-cash settlement of the related warrant liability of $7,480,000 ,
 discussed above. The Company recorded issuance costs of $197,627 related to the issuance of warrants during
 the year ended June 30, 2021.

&nbsp;&nbsp;&nbsp;&nbsp;● During
 the year ended June 30, 2021, the Company issued 5,333 shares of Common Stock from the exercise
 of stock options with a weighted average exercise price of $8.37 per share or $44,637 in the aggregate.

● During
 the year ended June 30, 2021, the Company issued 602,695 shares of its Common Stock for services rendered
 with a weighted average fair value of $4,024,746 per share or $6.68 in the aggregate.

**At-the Market Equity Offering Program**

On September 3, 2021, the Company entered "at the market" equity offering program to sell up to an aggregate of $20,000,000 of Common Stock. The shares are being issued pursuant to the Company's shelf registration statement on Form S-3 (File No. 333-252370) and the Company filed a prospectus supplement, dated September 3, 2021 with the SEC in connection with the offer and sale of the shares pursuant to the Equity Distribution Agreement with the broker. There were 1,165,813 shares sold under the ATM during the year ended June 30, 2022 for gross proceeds of $4,005,267. The agreement between the Company and Maxim Group LLC governing the ATM expired on September 3, 2022. At this time, the Company does not plan on signing a new ATM agreement.

**Common Stock Warrants**

On March 2, 2022, the Company closed the March 2022 Offering, in which it sold 15,000,000 units at $1.00 consisting of one share of Common Stock and one March 2022 Warrant exercisable at any time after issuance for one share of Common Stock of the Company for a total of 15,000,000 March 2022 Warrants at an exercise price of $1.00. On April 1, 2022 the underwriters of the March 2022 Offering exercised the over-allotment option to purchase 2,250,000 additional March 2022 Warrants to purchase shares at a price of $0.01 per warrant. The Company received net proceeds of $20,925. There were no March 2022 Warrants or April 2022 Overallotment Warrants exercised during the year ended June 30, 2022 and all March 2022 Warrants and April 2022 Overallotment Warrants were outstanding as of June 30, 2022.

On July 31, 2020, the Company issued 1,000,000 warrants in connection with its acquisition of Argyll with an exercise price of $8.00. These warrants were exercised during the year ended June 30, 2021. On June 2, 2021, the Company also issued 2,000,000 Series A Warrants and 2,000,000 Series B Warrants with an exercise price of $17.50 per share to the Holder of the Senior Convertible Note. There were no Series A Warrants exercised during the year ended June 30, 2022. The Series B Warrants may not be exercised until there is a redemption of principal under the Senior Convertible Note. The Series B Warrants were not exercisable at June 30, 2022.

On April 16, 2020, the Company closed an offering, (the "April 2020 Offering"), in which it sold 1,980,000 units consisting of one share of Common Stock and one Unit A Warrant and one Unit B Warrant, for a total of 3,960,000 warrants, with each warrant entitling the holder to purchase one share of Common Stock priced at $4.25 per share. The Company issued an additional 209,400 Unit A Warrants and 209,400 additional Unit B Warrants to the underwriter pursuant to an over-allotment option each entitling the holder to purchase one share of Common Stock at $0.01 per share. There were 1,136,763 of Unit A Warrants outstanding on June 30, 2022. The Unit B Warrants expired one year from the date of issuance on April 19, 2021 and there were no Unit B Warrants outstanding at June 30, 2022.

In connection with the April 2020 Offering the Company also issued 1,217,241 shares of Common Stock and 2,434,482 warrants ("Conversion Warrants") to purchase one share of Common Stock at $4.25 per share upon the conversion of $4,138,585 of the Company's convertible debt and accrued interest. There were 40,582 Unit A Conversion Warrants outstanding at June 30, 2022. The Unit B Conversion Warrants have been fully exercised for shares of Common Stock.

A summary of the warrant activity follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number of**<br> **Warrants** | **Weighted**<br> **Average**<br> **Exercise**<br> **Price** | **Weighted**<br> **Average**<br> **Remaining**<br> **Life (Years)** | **Intrinsic**<br> **Value** |
| Outstanding, July 1, 2020 | 5264592 | $4.28 | 0.86 | $14654296 |
| Issued | 5603674 | 14.38 |  |  |
| Exercised | (5503167) | 4.88 |  |  |
| Forfeited or cancelled | (14541) | 4.25 |  |  |
| Outstanding, June 30, 2021 | 5350558 | 14.19 | 3.14 | 8743588 |
| Issued | 17250000 | 1.00 |  |  |
| Exercised |  |  |  |  |
| Forfeited or cancelled |  |  |  |  |
| Outstanding June 30, 2022 | 22600558 | 4.12 | 4.07 |  |

---

**Common Stock Options**

On September 10, 2020, the Company's Board of Directors adopted the 2020 Equity and Incentive Plan (the "2020 Plan") that provides for the issuance of incentive and non-qualified stock options, restricted stock, restricted stock units and stock appreciation rights to officers, employees, directors, consultants, and other key persons. Under the 2020 Plan, the maximum number of shares of Common Stock authorized for issuance was 1,500,000 shares. Each year on January 1, for a period of up to nine years, the maximum number of shares authorized for issuance under the 2020 Plan is automatically increased by 233,968 shares. At June 30, 2022, there was a maximum of 1,967,936 shares of Common Stock authorized for issuance under the 2020 Plan. There were no additional equity awards eligible for issuance from the 2017 Stock Incentive Plan that had been adopted by the Company on August 1, 2017. The outstanding stock options granted under the 2017 Stock Incentive Plan were transferred to the 2020 Plan. As of June 30, 2022, there were 857,410 shares of Common Stock available for future issuance under the 2020 Plan.

A summary of the Company's stock option activity is as follows:

Schedule of Stock Option Activity

---

| | | |
|:---|:---|:---|
|  | **Number of**<br> **Options** | **Weighted Average**<br> **Exercise Price** |
| Outstanding, June 30, 2020 | 51942 | $10.50 |
| Granted | 436400 | 4.96 |
| Exercised | (5333) | 8.37 |
| Cancelled | (8333) | 4.09 |
| Outstanding, June 30, 2021 | 474676 | 5.49 |
| Granted | 1120150 | 6.71 |
| Exercised | (14000) | 4.82 |
| Cancelled | (470300) | 6.54 |
| Outstanding, June 30, 2022 | 1110526 | $6.29 |

---

As of June 30, 2022, the weighted average remaining life of the options outstanding was 4.10 years. There are 1,069,432 options exercisable at June 30, 2022, with a weighted average exercise price of $6.27.

**Stock Based Compensation**

During the year ended June 30, 2022 and 2021, the Company recorded stock-based compensation expense of $5,165,653 and $4,129,726, respectively, for the amortization of stock options and the issuance of Common Stock to employees and contractors for services which has been recorded as general and administrative expense in the consolidated statements of operations.

The Company had previously recognized stock-based compensation expense of $927,855 during its year ended June 30, 2020 related to the issuance of 117,450 shares of Common Stock for services rendered, comprised of 1,333 shares granted to management, 16,966 shares granted to employees, and 99,151 shares granted to consultants. At June 30, 2020, the Company recorded the fair value of these shares issued as liabilities to be settled in stock. During the first quarter of the Company's fiscal year ended June 30, 2021, the Company settled the balance of the liabilities to be settled in stock through the issuance of Common Stock in a non-cash transaction.

As of June 30, 2022, unamortized stock compensation for stock options was $1,074,485 with a weighted-average recognition period of 0.25 years. The options granted during the year ended June 30, 2022 were valued using the Black-Scholes option pricing model using the following weighted average assumptions:

---

| | |
|:---|:---|
|  | **Year ended <br> June 30, 2022** |
| Expected term, in years | 2.81 |
| Expected volatility | 150.82% |
| Risk-free interest rate | 0.45% |
| Dividend yield |  |
| Grant date fair value | $5.34 |

---

As of June 30, 2021, unamortized stock compensation for stock options was $598,105 with a weighted-average recognition period of 0.60 years. The options granted during the year ended June 30, 2021 were valued using the Black-Scholes option pricing model using the following weighted average assumptions:

---

| | |
|:---|:---|
|  | **Year ended <br> June 30, 2021** |
| Expected term, in years | 2.76 |
| Expected volatility | 132.60% |
| Risk-free interest rate | 0.32% |
| Dividend yield |  |
| Grant date fair value | $3.41 |

---

**Note 17 – Other Non-Operating Income (Loss), Net**

Other non-operating income (loss), net, for the years ended June 30, 2022 and 2021 was as follows:

---

| | | |
|:---|:---|:---|
|  | **June 30, 2022** | **June 30, 2021** |
| Foreign exchange loss | $(149573) | $(440452) |
| Gain on sale of business | 1069262 |  |
| Other non-operating loss | (1504155) | (19876) |
| Total | $(584466) | $(460328) |

---

On June 10, 2022, the Company entered into and consummated the transaction contemplated by that certain asset purchase agreement by and between the Company and SCV CAPITAL, LLC (the "Buyer") pursuant to which the Buyer agreed to acquire from the Company the Helix assets related to the Company's ownership and operation of Helix Game Centers. The total purchase price for the Helix Game Centers was approximately $1,200,000, with the purchase price being primarily attributable to the Buyer's assumption of certain liabilities related to the Helix Game Centers, including leases and sponsorship liabilities. The gain on sale of $1,069,262 was driven by the amounts of liabilities assumed by the Buyer. Other non-operating loss for the year ended June 30, 2022 includes the amount the Company agreed to pay the Holder of the Old Senior Convertible Note of $1,500,000 under the terms of a registration rights agreement (see Note 12).

**Note 18 – Fair Value Measurements**

The following financial instruments were measured at fair value on a recurring basis:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **June 30, 2022** | **June 30, 2022** | **June 30, 2022** | **June 30, 2022** |
|  | **Total** | **Level 1** | **Level 2** | **Level 3** |
| Contingent consideration (Note 3) | $3328361 | $— | $— | $3328361 |
| Liability for the March 2022 Warrants and April 2022 Overallotment Warrants (Note 12) | $2070000 | $2070000 | $— | $— |
| Liability for the Series A and Series B Warrants (Note 12) | $122730 | $— | $— | $122730 |
| Derivative liability on Senior Convertible Note (Note 12) | $9399620 | $— | $— | $9399620 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **June 30, 2021** | **June 30, 2021** | **June 30, 2021** | **June 30, 2021** |
|  | **Total** | **Level 1** | **Level 2** | **Level 3** |
| Liability for the Series A and Series B Warrants (Note 12) | $23500000 | $— | $— | $23500000 |

---

A summary of the changes in Level 3 financial instruments for the years ended June 30, 2022 and 2021 is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Warrant** <br> **Liability** | **Contingent Consideration** | **Derivative liability on Senior Convertible Note** |
| Balance at June 30, 2020 | $— | $— | $— |
| Fair value of warrants issued for Argyll acquisition ("Argyll Warrant Liability") (Note 3) | 2750076 |  |  |
| Revaluation of Argyll warrant liability for warrants issued in Argyll Acquisition (Note 16) | 4729924 |  |  |
| Settlement of Argyll warrant liability (Note 16) | (7480000) |  |  |
| Issuance of Series A and Series B warrants with Senior Convertible Note (Note 12) | 26680000 |  |  |
| Revaluation of Series A and Series B Warrants issued with Senior Convertible Note (Note 12) | (3180000) |  |  |
| Balance at June 30, 2021 | 23500000 |  |  |
| Change in fair value of Series A and Series B Warrants issued with Senior Convertible Note (Note 12) | (23377270) |  |  |
| Fair value of contingent consideration for Bethard at acquisition (Note 3) |  | 6700000 |  |
| Payments of Bethard contingent consideration |  | (1016331) |  |
| Change in fair value of Bethard contingent consideration liability (Note 3) |  | (2355308) |  |
| Fair value of derivative liability on Senior Convertible Note (Note 12) |  |  | 20281861 |
| Change in the fair value of the derivative liability on Senior Convertible Note (Note 12) |  |  | (10882241) |
| Balance at June 30, 2022 | $122730 | $3328361 | $9399620 |

---

The Series A and Series B Warrants outstanding at June 30, 2022 were valued using a Monte Carlo valuation model with the following assumptions:

---

| | | |
|:---|:---|:---|
|  | **June 30, 2022** | **June 30, 2021** |
| Contractual term, in years | 2.00 – 4.00 | 2.00 – 4.00 |
| Expected volatility | 125% – 133 | 120% – 140 |
| Risk-free interest rate | 2.75% – 2.98 | 0.24% – 0.65 |
| Dividend yield |  |  |
| Conversion / exercise price | $17.50 | $17.50 |

---

The value of the March 2022 Warrants issuance at March 2, 2022 were valued using a Monte Carlo valuation model with the following assumptions:

---

| | |
|:---|:---|
|  | **March 2, 2022** |
| Contractual term, in years | 5.00 |
| Expected volatility | 139% |
| Risk-free interest rate | 1.74% |
| Dividend yield |  |
| Conversion / exercise price | $1.00 |

---

On issuance, the March 2022 Warrants were classified as a Level 3 instrument and were subsequently transferred out of Level 3 and classified as a Level 1, as subsequent valuations were based upon the market price of the warrants. On issuance, the April 2022 Overallotment Warrants were classified as Level 1 using the market price. At June 30, 2022 the March 2022 Warrants and the April 2022 Overallotment Warrants were valued using the market price.

The value of the derivative liability on the Senior Convertible Note at June 30, 2022 was valued using a nonperformance risk adjusted Monte Carlo valuation model with the following assumptions:

---

| | |
|:---|:---|
|  | **June 30, 2022** |
| Contractual term, in years | 0.92 |
| Expected volatility | 137.11% |
| De-leveraged volatility | 62.88% |
| Risk-free interest rate | 2.72% |
| Dividend yield |  |
| Conversion / exercise price | $2.1832 |

---

The fair value of a derivative instrument in a liability position includes measures of the Company's nonperformance risk. Significant changes in nonperformance risk used in the fair value measurement of the derivative liability may result in significant changes to the fair value measurement. The cash liability calculated under the terms of the New Note of approximately $180,000,000 is materially higher than the fair value of the derivative liability of $9,399,620 calculated at June 30, 2022. The calculated make-whole liability may differ materially from the amount the Company may be required to pay under the New Note. The Company has held non-binding discussions with the Holder to restructure its obligation under the New Note. However, there can be no guarantee that the Company will be able to reach an agreement to restructure the New Note.

The following is information relative to the Company's derivative instruments in the consolidated balance sheets as of June 30, 2022 and 2021:

---

| | | | |
|:---|:---|:---|:---|
| **Derivatives Not Designated as Hedging Instruments** | **Balance Sheet Location** | **June 30, 2022** | **June 30, 2021** |
| Derivative liability on Senior Convertible Note (Note 12) | Derivative liability | $9399620 | $- |

---

The effect of the derivative instruments on the consolidated statements of operations is as follows:

---

| | | | |
|:---|:---|:---|:---|
| | | **Amount of Gain (Loss) Recognized in Income on Derivatives** | **Amount of Gain (Loss) Recognized in Income on Derivatives** |
| | | **Year ended June 30,** | **Year ended June 30,** |
| <br>**Derivatives Not Designated as Hedging Instruments** | <br>**Location of Gain or (Loss) Recognized in Income on Derivatives** | **2022** | **2021** |
| Derivative liability on Senior Convertible Note (Note 12) | Change in fair value of derivative liability on Senior Convertible Note | $(10882241) | $- |

---

**Argyll Warrant Valuation**

During the year ended June 30, 2021, the Company issued 1,000,000 warrants in connection with its acquisition of Argyll. Each warrant entitled the holder to purchase one share of Common Stock at exercise price of $8.00 per share. The Company initially estimated the fair value of the warrants issued to be $5,488,171 as of the Argyll acquisition date of July 31, 2020. At September 30, 2020, the Company estimated the fair value of these warrants to be $3,387,218, resulting in a gain on the change in fair value of warrant liability in the amount of $2,100,953. The Company valued the warrants using the Black-Scholes option pricing model with the following terms on July 31, 2020: (a) exercise price of $8.00, (b) volatility rate of 187.40%, (c) discount rate of 0.48%, (d) term of three years, and (e) dividend rate of 0%. The Company valued the warrant using the Black-Scholes option pricing model with the following terms on September 30, 2020: (a) exercise price of $8.00, (b) volatility rate of 183.25%, (c) discount rate of 0.28%, (d) term of 2 years and 10 months, and (e) dividend rate of 0%.

Subsequent to September 30, 2020, the holder of the warrants issued in the Argyll acquisition exercised the warrants resulting in the issuance of 1,000,000 shares of Common Stock by the Company. Prior to the exercises of the warrants, the Company recorded a measurement period adjustment to reduce the acquisition date fair value of the warrant liability by $2,738,095 using a Monte Carlo simulation. The issuance of the shares of Common Stock upon exercise of the warrants were recorded at their settlement date fair value of $15,480,000 comprised of $8,000,000 of cash received from the exercise, and non-cash settlement of the warrant liability totaling $7,480,000.

**Assets Measured on a Nonrecurring Basis**

Assets that are measured at fair value on a nonrecurring basis are remeasured when carrying value exceeds fair value. This includes the evaluation of long-lived assets, goodwill and other intangible assets for impairment. The Company's estimates of fair value required it to use significant unobservable inputs, representative of Level 3 fair value measurements, including numerous assumptions with respect to future circumstances that might directly impact each of the relevant asset groups' operations in the future and are therefore uncertain. The carrying value of the assets after any impairment approximates fair value.

The Company assesses the carrying amount of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The Company assesses the fair value of goodwill using the income approach. Inputs used to calculate the fair value based on the income approach primarily include estimated future cash flows, discounted at a rate that approximates the cost of capital of a market participant.

The Company uses undiscounted future cash flows of the asset or asset group for equipment and intangible assets. During the year ended June 30, 2022, the Company wrote down certain long-lived assets other than goodwill related to the same reporting unit to fair value. The Company estimated the fair value when conducting the long-lived asset impairment tests primarily using an income approach and used a variety of unobservable inputs and underlying assumptions consistent with those discussed above for purposes of the Company's goodwill impairment test.

During the year ended June 30, 2022, the Company recognized asset impairment charges to the goodwill and long-lived assets of the iGaming Argyll (UK) reporting unit in the EEG iGaming segment, and EGL, GGC and Helix reporting units in the EEG Games segment (See Notes 6, 7 and 11).

**Note 19 – Income Taxes**

The income (loss) before income taxes follows:

---

| | | |
|:---|:---|:---|
|  | **Fiscal 2022** | **Fiscal 2021** |
| United States | $(87679037) | $(19987348) |
| International | (20227495) | (10196922) |
| Total loss before income taxes | $(107906532) | $(30184270) |

---

The provision (benefit) from income taxes follows:

---

| | | |
|:---|:---|:---|
|  | **Fiscal 2022** | **Fiscal 2021** |
| Current: |  |  |
| &nbsp;&nbsp;&nbsp;Federal | $- | $300000 |
| &nbsp;&nbsp;&nbsp;State |  |  |
| &nbsp;&nbsp;&nbsp;Foreign | (2581) | 24722 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current | (2581) | 324722 |
| Deferred: |  |  |
| &nbsp;&nbsp;&nbsp;Federal | (5671861) | (4136258) |
| &nbsp;&nbsp;&nbsp;State |  |  |
| &nbsp;&nbsp;&nbsp;Foreign | - |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total deferred | (5671861) | (4136258) |
| Income tax provision (benefit) | $(5674442) | $(3811536) |

---

During the year ended June 30, 2022, the Company recorded a deferred tax liability in connection with its acquisition of Bethard. This acquisition impacted the Company's estimate of realizability of its deferred tax assets and resulted in a reduction of the Company's valuation allowance of $5,671,861 during the year ended June 30, 2022. During the year ended June 30, 2021, the Company recorded a deferred tax liability in connection with its acquisitions of Argyll, EGL, Helix and ggCircuit. These acquisitions impacted the Company's estimate of realizability of its deferred tax assets and resulted in a reduction to the valuation allowance of $4,136,258 during the year ended June 30, 2021.

The reconciliation of the expected tax expense (benefit) based on U.S. federal statutory rate of 21% with the actual expense follows:

---

| | | |
|:---|:---|:---|
|  | **Fiscal 2022** | **Fiscal 2021** |
| U.S. federal statutory rate | $(22660372) | $(6338697) |
| Change in valuation allowance | 17373839 | 1133233 |
| Foreign tax rate and other foreign tax | (1171464) | (150274) |
| Extinguishment of senior convertible note | 5544743 |  |
| Non-deductible warrant revaluations | (6608337) | 325484 |
| Non-deductible revaluation of contingent consideration | 1790656 | 367207 |
| Acquisition costs | 56493 | 521235 |
| Other |  | 330276 |
| Income tax provision (benefit) | $(5674442) | $(3811536) |

---

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits Net Operating Liabilities ("NOLs") carryovers and carrybacks to offset 100% of taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. The Company is currently evaluating the impact of the CARES Act, but due to sustained losses, the NOL carryback provision of the CARES Act is not expected to yield a benefit to us.

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and amounts used for income tax purposes. Significant components of the Company's deferred tax assets and liabilities consist of the following:

---

| | | |
|:---|:---|:---|
|  | **Fiscal 2022** | **Fiscal 2021** |
| Assets: |  |  |
| &nbsp;&nbsp;&nbsp;Net operating losses | $29509842 | $9728136 |
| &nbsp;&nbsp;&nbsp;Nonqualified stock options | 1307113 | 382974 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 473380 | 452388 |
| &nbsp;&nbsp;&nbsp;Other | 26265 | 26264 |
| Gross deferred tax assets | 31316600 | 10589762 |
| Deferred tax liabilities |  |  |
| &nbsp;&nbsp;&nbsp;Acquired intangible assets | (3269763) | (5593787) |
| Net deferred tax assets | 28046837 | 4995975 |
| Valuation allowance | (28046837) | (6866836) |
| Deferred tax liabilities, net | $— | $(1870861) |

---

The Company had net deferred tax assets of $28,046,837 at June 30, 2022 for which there is a full valuation allowance. The Company determined that it would not be able to realize the remaining deferred tax assets in the future. The need to maintain a valuation allowance against the Company's deferred tax assets may cause greater volatility to the Company's effective tax rate.

At June 30, 2022, the Company had estimated federal net operating loss carry forwards of $95,096,045, which may be offset against future taxable income subject to limitation under IRC Section 382. At June 30, 2022, the Company had net operating loss carryforwards related to its foreign operations in Malta of $13,233,576 and the UK of $1,314,884 that do not expire, as well as net operating loss carryforwards related to its foreign operations in Switzerland of $24,985,656 that can be carried forward for 7 years. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted in response to the COVID-19 pandemic. The CARES Act, among other things, permits net operating loss carryovers and carrybacks to offset taxable income for taxable years beginning before 2021. In addition, the CARES Act allows NOLs incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. Due to historical losses, the net operating loss carryback provision of the CARES Act is would not yield a material benefit to the Company. The Company determined that a full valuation allowance will be recorded against the net operating loss deferred tax assets.

The Company applied the "more-likely-than-not" recognition threshold to all tax positions taken or expected to be taken in a tax return, which resulted in no unrecognized tax benefits as of June 30, 2022 or June 30, 2021, respectively.

During the years ended June 30, 2022 and 2021, the Company recorded income tax benefits of $5,674,442 and $3,811,536, respectively, which is attributable primarily to non-recurring partial releases of the Company's U.S. valuation allowance as a result of purchase price accounting. The Company regularly evaluates the realizability of its deferred tax assets and establishes a valuation allowance if it is more likely than not that some or all of the deferred tax assets will not be realized.

**Note 20—Segment Information**

During the fourth quarter of fiscal 2022, the Company evaluated its reportable segments and changed them to: EEG iGaming and EEG Games. This change reflects management's organizational structure and financial information available to and evaluated regularly by the chief operating decision maker ("CODM"), who is the Company's Chief Executive Officer.

As a result of the change in reportable segments described above, the Company has recast previously reported information to conform to the current management view for all prior periods presented. The changes to reportable segments had no impact to the Company's consolidated financial statements.

The Company utilizes Adjusted EBITDA (as defined below) as its measure of segment profit or loss. The following table highlights the Company's revenues and Adjusted EBITDA for each reportable segment and reconciles Adjusted EBITDA on a consolidated basis to net loss. Total capital expenditures for the Company were not material to the consolidated financial statements.

A measure of segment assets and liabilities has not been currently provided to the Company's CODM and therefore is not shown below. The following tables present the Company's segment information:

---

| | | |
|:---|:---|:---|
|  | **For the year ended June 30,** | **For the year ended June 30,** |
|  | **2022** | **2021** |
| **Revenues:** |  |  |
| EEG iGaming segment | 53104795 | 16231028 |
| EEG Games segment | 5246855 | 552886 |
| &nbsp;&nbsp;&nbsp;**Total** | **58351650** | **16783914** |
| **Adjusted EBITDA** |  |  |
| EEG iGaming segment | (7526205) | (6740890) |
| EEG Games segment | (4915549) | (454467) |
| Other<sup>(1)</sup> | (12960209) | (7475738) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Total Adjusted EBITDA** | (25401963) | (14671095) |
| ***Adjusted for:*** |  |  |
| Interest expense | (6423039) | (698973) |
| Loss on conversion of senior convertible note | (5999662) |  |
| Loss on extinguishment of senior convertible note | (28478804) |  |
| Change in fair value of derivative liability | (10882241) |  |
| Change in fair value of warrant liability | 31468270 | (1549924) |
| Change in fair value of contingent consideration | 2355308 | (1748607) |
| Other non-operating income (loss), net | (584466) | (460328) |
| Income tax benefit (expense) | 5674442 | 3811536 |
| Depreciation and amortization | (12026581) | (3416252) |
| Asset impairment charges | (46498689) |  |
| Stock-based Compensation | (5165653) | (4129726) |
| Cost of acquisition | (269012) | (3509365) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**Net loss** | (102232090) | (26372734) |

---

(1) Other comprises of corporate and overhead costs.

(2) The Company has no intersegment revenues or costs and thus no eliminations required.

(3) The Company defines Adjusted EBITDA as earnings (loss) before, as applicable to the particular period, interest expense, net; income taxes; depreciation and amortization; stock-based compensation; cost of acquisition; asset impairment charges; loss on extinguishment of senior convertible note; loss on conversion of senior convertible note; change in fair value of derivative liability; change in fair value of warrant liability; change in fair value of contingent consideration; and other income (loss), and certain other non-recurring, non-cash or non-core items (included in table above).

**Note 21 – Subsequent Events**

 ****

***September 2022 Financing***

On September 15, 2022, the Company entered into a underwriting agreement (the "Underwriting Agreement") with Maxim Group LLC and Joseph Gunnar & Co., LLC, as representative of the several underwriters identified therein (collectively, the "Underwriters"), relating to a firm commitment public offering of (a) 30,000,000 shares of the Company's Common Stock and (b) Warrants ("September 2022 Warrants") to purchase up to 30,000,000 shares of Common Stock, at an exercise price of $0.25 per share, at an aggregate price of $0.25 per share and accompanying Warrant (the "September 2022 Offering"). Under the terms of the Underwriting Agreement, the Company granted the Underwriters a 45-day option an option to purchase up to an additional 4,500,000 of Common Stock (the "September 2022 Overallotment Common Stock") and/or Warrants (the "September 2022 Overallotment Warrants") (collectively, the "September 2022 Overallotment"). The closing of the offering took place on September 19, 2022.

The gross proceeds received from the sale of the shares of the Common Stock and September 2022 Warrants in the September 2022 Offering, before deducting underwriting discounts and commissions and estimated offering expenses payable by the Company and before any overallotment, was $7,500,000.

The underwriters exercised their option for 3,600,000 September Overallotment Warrants, at a purchase price of $0.01 per warrant, with an exercise price of $0.25 per warrant. Total proceeds from the September 2022 Overallotment Warrants was $36,000.

The Company remitted to the Holder of the Senior Convertible Note an amount of $2,265,928 equal to fifty percent (50%) of all net proceeds above $2,000,000 following the payment of 7% in offering fees including Underwriting discounts and commissions. In addition, as part of the September 2022 Offering, the Holder purchased $512,500 of securities (2,050,000 shares of Common Stock and 2,050,000 Warrants) and the Company paid the Holder an additional $512,500. The proceeds remitted to the Holder of the Senior Convertible Note reduced the principal balance of the Senior Convertible Note on a dollar-for-dollar basis.

The net proceeds received by the Company, after deducting underwriting discounts and commissions and offering expenses payable by the Company and amounts remitted to the Holder of the Senior Convertible Note was $4,080,990.

The shares of Common Stock and the September 2022 Warrants, including the 2022 Overallotment Warrants, sold by the Company have been registered pursuant to a registration statement on Form S-3 (File No. 333-252370), which the SEC declared effective on February 5, 2021. A final prospectus supplement and accompanying base prospectus relating to the offering were filed with the SEC on September 19, 2022.

The Company does not intend to list the September 2022 Warrants, including the 2022 Overallotment Warrants, sold in the offering on any securities exchange or other trading market.

On September 19, 2022, prior to the closing of the offering, the Company entered into a warrant agency agreement (the "Warrant Agency Agreement") with Vstock Transfer, LLC ("Vstock"), to serve as the Company's warrant agent for the September 2022 Warrants, including September 2022 Overallotment Warrants. Upon the closing of the offering. The September 2022 Warrants, including September 2022 Overallotment Warrants are exercisable upon issuance and expire five years from the date they first became exercisable.

**ESPORTS ENTERTAINMENT GROUP, INC.**

**Quarterly Report on Form 10-Q**

**For the Quarter ended September 30, 2022**

**Esports Entertainment Group, Inc.**

**Condensed Consolidated Balance Sheets**

---

| | | |
|:---|:---|:---|
|  | **September 30, 2022<br> (Unaudited)** | **June 30, 2022** |
| **ASSETS** |  |  |
| **<u>Current assets</u>** |  |  |
| Cash | $2982179 | $2517146 |
| Restricted cash | 1299252 | 2292662 |
| Accounts receivable, net | 529699 | 304959 |
| Receivables reserved for users | 3222992 | 2941882 |
| Other receivables | 1038691 | 372283 |
| Prepaid expenses and other current assets | 1156585 | 1543053 |
| &nbsp;&nbsp;&nbsp;**Total current assets** | 10229398 | 9971985 |
| Equipment, net | 38524 | 43925 |
| Operating lease right-of-use asset | 134151 | 164288 |
| Intangible assets, net | 26871932 | 30346489 |
| Goodwill | 20993275 | 22275313 |
| Other non-current assets | 1665463 | 2062176 |
| &nbsp;&nbsp;&nbsp;**TOTAL ASSETS** | $59932743 | $64864176 |
| **LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (DEFICIT)** |  |  |
| **<u>Current liabilities</u>** |  |  |
| Accounts payable and accrued expenses | $12291670 | $12344052 |
| Liabilities to customers | 4245389 | 4671287 |
| Deferred revenue | 1039753 | 575097 |
| Senior convertible note | 32221573 | 35000000 |
| Derivative liability | 9124756 | 9399620 |
| Current portion of notes payable and other long-term debt | 92726 | 139538 |
| Operating lease liability – current | 358900 | 364269 |
| Contingent consideration – current | 3148893 | 3328361 |
| &nbsp;&nbsp;&nbsp;**Total current liabilities** | 62523660 | 65822224 |
| Warrant liability | 5028462 | 2192730 |
| Operating lease liability – non-current | 606261 | 669286 |
| &nbsp;&nbsp;&nbsp;**Total liabilities** | 68158383 | 68684240 |
| Commitments and contingencies (Note 12) |  |  |
| **<u>Mezzanine equity:</u>** |  |  |
| 10% Series A cumulative redeemable convertible preferred stock, $0.001 par value, 1,725,000 authorized, 835,950shares issued and outstanding, aggregate liquidation preference $9,195,450 at September 30, 2022 | 7855924 | 7781380 |
| **<u>Stockholders' equity (deficit)</u>** |  |  |
| Preferred stock $0.001par value; 10,000,000shares authorized |  |  |
| Common stock $0.001par value; 500,000,000shares authorized, 70,922,944and 40,922,944shares issued and outstanding as of September 30, 2022 and June 30, 2022, respectively | 70923 | 40923 |
| Additional paid-in capital | 147059122 | 144874173 |
| Accumulated deficit | (153309017) | (149140426) |
| Accumulated other comprehensive loss | (9902592) | (7376114) |
| &nbsp;&nbsp;&nbsp;**Total stockholders' equity (deficit)** | (16081564) | (11601444) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (DEFICIT)** | $59932743 | $64864176 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**Esports Entertainment Group, Inc.**

**Condensed Consolidated Statements of Operations**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended September 30,** | **Three Months Ended September 30,** |
|  | **2022** | **2021** |
| Net revenue | $9605264 | $16408291 |
| **Operating costs and expenses:** |  |  |
| Cost of revenue | 3750416 | 6451292 |
| Sales and marketing | 2445335 | 7386463 |
| General and administrative | 9471034 | 11175136 |
| Total operating expenses | 15666785 | 25012891 |
| **Operating loss** | 6061521 | 8604600 |
| **Other income (expense):** |  |  |
| Interest expense | (1058408) | (2345196) |
| Change in fair value of derivative liability on the senior convertible note | 274864 |  |
| Change in fair value of warrant liability | 2450556 | 11808600 |
| Change in fair value of contingent consideration | 179468 |  |
| Other non-operating income (loss) | 46450 | (1411185) |
| Total other income (expense), net | 1892930 | 8052219 |
| Loss before income taxes | 4168591 | 552381 |
| Income tax benefit (expense) | - | - |
| **Net loss** | $4168591 | $552381 |
| Dividend on 10% Series A cumulative redeemable convertible preferred stock | (200628) |  |
| Accretion of 10% Series A cumulative redeemable convertible preferred stock to redemption value | (74544) | - |
| **Net loss attributable to common stockholders** | $4443763 | $552381 |
| Net loss per common share: |  |  |
| Basic and diluted loss per common share | $(0.10) | $(0.03) |
| Weighted average number of common shares outstanding, basic and diluted | 44835987 | 21954892 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**Esports Entertainment Group, Inc.**

**Condensed Consolidated Statements of Comprehensive Loss**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended September 30,** | **Three Months Ended September 30,** |
|  | **2022** | **2021** |
| Net loss | $4168591 | $552381 |
| **Other comprehensive loss:** |  |  |
| Foreign currency translation loss | 2526478 | 1424986 |
| Total comprehensive loss | $6695069 | $1977367 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**Esports Entertainment Group, Inc.**

**Condensed Consolidated Statements of Changes in 10% Series A Cumulative Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) For the Three Months Ended September 30, 2022 and 2021 (Unaudited)**

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **10% Series A Cumulative Redeemable<br> Convertible Preferred Stock** | **10% Series A Cumulative Redeemable<br> Convertible Preferred Stock** | **Common Stock** | **Common Stock** | | | | |
|  | **Shares** | **Amount** | **Shares** | **Amount** | **Additional paid-in**<br>**capital** | **Accumulated**<br>**Deficit** | **Accumulated<br> other comprehensive**<br>**loss** | **Total**<br> **Stockholders'**<br> **Equity**<br>**(Deficit)** |
| Balance as of July 1, 2022 | 835950 | $7781380 | 40922944 | $40923 | $144874173 | $(149140426) | $(7376114) | $(11601444) |
| &nbsp;&nbsp;&nbsp;Accretion of redemption value and issuance costs |  | 74544 |  |  | (74544) |  |  | (74544) |
| &nbsp;&nbsp;&nbsp;10% Series A cumulative redeemable convertible preferred stock cash dividend |  |  |  |  | (200628) |  |  | (200628) |
| &nbsp;&nbsp;&nbsp;Common stock and warrants issued in equity financing, net of issuance costs |  |  | 30000000 | 30000 | 1538130 |  |  | 1568130 |
| &nbsp;&nbsp;&nbsp;Stock based compensation |  |  |  |  | 921991 |  |  | 921991 |
| &nbsp;&nbsp;&nbsp;Foreign exchange translation |  |  |  |  |  |  | (2526478) | (2526478) |
| &nbsp;&nbsp;&nbsp;Net loss | - | - | - | - | - | (4168591) | - | (4168591) |
| Balance as of September 30, 2022 | 835950 | $7855924 | 70922944 | $70923 | $147059122 | $(153309017) | $(9902592) | $(16081564) |
| Balance as of July 1, 2021 |  | $- | 21896145 | $21896 | $122341002 | $(46908336) | $(669170) | $74785392 |
| &nbsp;&nbsp;&nbsp;Common stock issued upon the exercise of stock options |  |  | 8500 | 8 | 40961 |  |  | 40969 |
| &nbsp;&nbsp;&nbsp;Common stock issued for services |  |  | 78527 | 79 | 574220 |  |  | 574299 |
| &nbsp;&nbsp;&nbsp;Stock based compensation |  |  |  |  | 308073 |  |  | 308073 |
| &nbsp;&nbsp;&nbsp;Foreign exchange translation |  |  |  |  |  |  | (1424986) | (1424986) |
| &nbsp;&nbsp;&nbsp;Net loss | - | - | - | - | - | (552381) | - | (552381) |
| Balance as of September 30, 2021 | - | $- | 21983172 | $21983 | $123264256 | $(47460717) | $(2094156) | $73731366 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**Esports Entertainment Group, Inc.**

**Condensed Consolidated Statements of Cash Flows**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **Three Months Ended September 30,** | **Three Months Ended September 30,** |
|  | **2022** | **2021** |
| **Cash flows from operating activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | $(4168591) | $(552381) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile net loss to net cash used in operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization and depreciation | 1862718 | 3230736 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Right-of-use asset amortization | 18443 | 111616 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 921991 | 882372 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discount |  | 1639494 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of warrant liability | (2450556) | (11808600) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of contingent consideration | (179468) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in fair value of derivative liability | (274864) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other non-cash charge, net |  | (92820) |
| &nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable | (235486) | (220660) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Receivables reserved for users | (227573) | (2878302) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other receivables | (395566) | 360125 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 34553 | 331953 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other non-current assets | (338) | 131 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued expenses | 714622 | 2772657 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Liabilities to customers | (611003) | 2793781 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | 464656 | 128935 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Operating lease liability | (68392) | (90256) |
| Net cash used in operating activities | (4594854) | (3391219) |
| **Cash flows from investing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Cash consideration paid for Bethard acquisition, net of cash acquired |  | (14947835) |
| &nbsp;&nbsp;&nbsp;Purchase of intangible assets |  | (38606) |
| &nbsp;&nbsp;&nbsp;Purchases of equipment | - | (56440) |
| Net cash used in investing activities | - | (15042881) |
| **Cash flows from financing activities:** |  |  |
| &nbsp;&nbsp;&nbsp;Proceeds from equity financing, net of issuance costs | 6854418 |  |
| &nbsp;&nbsp;&nbsp;Payment of dividends on 10% Series A cumulative redeemable convertible preferred stock | (200628) |  |
| &nbsp;&nbsp;&nbsp;Payment of Bethard contingent consideration |  | (850520) |
| &nbsp;&nbsp;&nbsp;Proceeds from exercise of stock options and warrants, net of issuance costs |  | 4015 |
| &nbsp;&nbsp;&nbsp;Repayment of senior convertible note | (2778427) |  |
| &nbsp;&nbsp;&nbsp;Repayment of notes payable and finance leases | (36814) | (52857) |
| Net cash provided by (used in) financing activities | 3838549 | (899362) |
| Effect of exchange rate on changes in cash and restricted cash | 227928 | (154269) |
| Net decrease in cash and restricted cash | (528377) | (19487731) |
| Cash and restricted cash, beginning of period | 4809808 | 23360368 |
| Cash and restricted cash, end of period | $4281431 | $3872637 |

---

Reconciliation of cash and restricted cash to the unaudited condensed consolidated balance sheets:

---

| | | |
|:---|:---|:---|
|  | **September 30, 2022** | **September 30, 2021** |
| Cash | $2982179 | $2817536 |
| Restricted cash | 1299252 | 1055101 |
| Cash and restricted cash | $4281431 | $3872637 |

---

Reconciliation of cash and restricted cash to the unaudited condensed consolidated balance sheets:

---

| | | |
|:---|:---|:---|
|  | **June 30, 2022** | **June 30, 2021** |
| Cash | $2517146 | $19917196 |
| Restricted cash | 2292662 | 3443172 |
| Cash and restricted cash | $4809808 | $23360368 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**Esports Entertainment Group, Inc.**

**Condensed Consolidated Statements of Cash Flows**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
|  | **September 30, 2022** | **September 30, 2021** |
| SUPPLEMENTAL CASH FLOW INFORMATION: |  |  |
| CASH PAID FOR: |  |  |
| Interest | $701496 | $700000 |
| Income taxes | $- | $- |
| SUPPLEMENTAL DISLCOSURE OF NON-CASH FINANCING ACTIVITIES: |  |  |
| Accretion of 10% Series A cumulative redeemable convertible preferred stock | $74544 | $- |
| Cash consideration payable for Bethard acquisition | $- | $4721852 |
| Fair value of contingent consideration payable in cash and common stock for Bethard acquisition | $- | $6700000 |

---

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

**Esports Entertainment Group, Inc.**

**Notes to Unaudited Condensed Consolidated Financial Statements**

**Note 1 – Nature of Operations**

Esports Entertainment Group, Inc. (the "Company" or "EEG") was formed in the State of Nevada on July 22, 2008 under the name Virtual Closet, Inc., before changing its name to DK Sinopharma, Inc. on June 6, 2010 and then to, Vgambling, Inc. on August 12, 2014. On or about April 24, 2017, Vgambling, Inc. changed its name to Esports Entertainment Group, Inc.

The Company is a diversified operator of iGaming, traditional sports betting and esports businesses with a global footprint. The Company's strategy is to build and acquire iGaming and traditional sports betting platforms and use them to grow the esports business whereby customers have access to online tournaments and player-versus-player wagering. On July 31, 2020, the Company commenced revenue generating operations with the acquisition of LHE Enterprises Limited, holding company for Argyll Entertainment ("Argyll"), an online sportsbook and casino operator. On January 21, 2021, the Company completed its acquisition of Phoenix Games Network Limited, the holding company for the Esports Gaming League ("EGL"), and provider of event management and team services, including live and online events and tournaments. On March 1, 2021, the Company completed the acquisition of the operating assets and specified liabilities that comprise the online gaming operations of Lucky Dino Gaming Limited, a company registered in Malta, and Hiidenkivi Estonia OU, its wholly owned subsidiary registered in Estonia (collectively referred to as "Lucky Dino").

On June 1, 2021, the Company acquired ggCircuit, LLC ("GGC") and Helix Holdings, LLC ("Helix"). GGC is a business-to-business software company that provides cloud-based management for gaming centers, a tournament platform and integrated wallet and point-of-sale solutions. Helix operated esports centers that provided esports programming and gaming infrastructure. The Helix game center assets in Foxboro, MA and North Bergen, NJ, herein referred to as the "Helix Game Centers" were sold on June 10, 2022. EEG Labs, the analytics platform, and the yet to be released proprietary player-versus-player wagering platform Betground from the Helix acquisition were retained. On July 13, 2021, the Company completed its acquisition of the online casino and sports book business operating under the brand of Bethard (referred to herein as "Bethard").

**Note 2 – Summary of Significant Accounting Policies**

**Basis of presentation and principles of consolidation**

The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") for interim financial information, and with the rules and regulations of the United States Securities and Exchange Commission (the "SEC") set forth in Article 8 of Regulation S-X. Pursuant to the rules and regulations of the SEC, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. GAAP have been omitted. The unaudited condensed consolidated financial statements reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to fairly state the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full fiscal year. The unaudited condensed consolidated financial statements should be read along with the Annual Report filed on Form 10-K of the Company for the annual period ended June 30, 2022. The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All material intercompany transactions and balances have been eliminated in consolidation.

**Reportable Segments**

The Company operates two complementary business segments:

*<u>EEG iGaming</u>*

EEG iGaming includes the Company's iGaming casino and sportsbook product offerings. Currently, the Company operates the business to consumer segment primarily in Europe.

 

*<u>EEG Games</u>*

EEG Games delivers esports entertainment experiences to gamers through a combination of 1) the Company's proprietary infrastructure software, GGC, which underpins our focus on esports and is a leading provider of local area network ("LAN") center management software and services, enabling us to seamlessly manage mission critical functions such as game licensing and payments, 2) online tournaments (through the Company's EGL tournament platform), and 3) player-vs-player wagering (through our yet to be released Betground, our proprietary wagering product). Currently, we operate our esports EEG Games business in the United States and Europe.

These segments consider the organizational structure of the Company and the nature of financial information available and reviewed by the chief operating decision maker to assess performance and make decisions about resource allocations.

**Use of Estimates**

The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the unaudited condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the valuation and accounting for equity awards related to warrants and stock-based compensation, determination of fair value for derivative instruments, the valuation and recoverability of goodwill and intangible assets, the accounting for business combinations, including estimating contingent consideration and allocating purchase price, estimating fair value of intangible assets, as well as the estimates related to accruals and contingencies.

**Liquidity and Going Concern**

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared assuming the Company will continue as a going concern. The going concern basis of presentation assumes that the Company will continue in operation one year after the date these unaudited condensed consolidated financial statements are issued and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

The Company has determined that certain factors raise substantial doubt about its ability to continue as a going concern for a least one year from the date of issuance of these unaudited condensed consolidated financial statements. One such factor considered by the Company is its compliance with certain debt covenants under terms of the Senior Convertible Note (the "Senior Convertible Note"), issued by the Company on February 22, 2022 in the principal amount of $35,000,000 with a September 30, 2022 outstanding carrying value of $32,221,573. The Company has not maintained compliance with certain debt covenants and is currently in default under the terms of the Senior Convertible Note. The Company repaid principal of $2,778,427 during the three months ended September 30, 2022, using proceeds from the September 2022 equity financing ("September 2022 Offering"). The maturity date of the Senior Convertible Note is June 2, 2023. The Senior Convertible Note is classified as a current liability on the unaudited condensed consolidated balance sheet and due to the default it may be redeemed by the holder thereof (the "Holder") prior to its maturity date. The Company has also recorded a derivative liability for the alternate conversion in the Senior Convertible Note of $9,124,756 in current liabilities on the unaudited condensed consolidated balance sheet that may be due to the Holder as part of the make-whole liability under the default terms of the Senior Convertible Note. The cash liability calculated under the terms of the Senior Convertible Note of approximately $606,000,000, is materially higher than the fair value of the derivative liability of $9,124,756 calculated at September 30, 2022. The calculated make-whole liability may differ materially from the amount at which the Company may be required to pay under the Senior Convertible Note. The Company has held non-binding discussions with the Holder to restructure its obligation under the Senior Convertible Note. However, there can be no guarantee that the Company will be able to reach an agreement to restructure the Senior Convertible Note. See Note 11 for additional information regarding the Senior Convertible Note, and the potential effects on the Company's business, financial condition, and results of operations.

In addition to compliance with debt covenants, the Company considered that it had an accumulated deficit of $153,309,017 as of September 30, 2022 and that in recent years it has had a history of recurring losses from operations and recurring negative cash flows from operations as it has prepared to grow its esports business through acquisition and new venture opportunities. At September 30, 2022, the Company had total current assets of $10,229,398 and total current liabilities of $62,523,660. Net cash used in operating activities for the three months ended September 30, 2022 was $4,594,854, which includes a net loss of $4,168,591. The Company also considered its current liquidity as well as future market and economic conditions that may be deemed outside the control of the Company as it relates to obtaining financing and generating future profits. As of September 30, 2022, the Company had $2,982,179 of available cash on-hand and net current liabilities of $52,294,262.

On September 19, 2022 the Company closed an offering (the "September 2022 Offering") in which it sold (a) 30,000,000 shares of Common Stock, $0.001 par value per share and (b) warrants to purchase up to 30,000,000 shares of Common Stock, at an exercise price of $0.25 per share (the "September 2022 Offering Warrants"), at an aggregate price of $0.25 per share and accompanying September 2022 Offering Warrant. The gross proceeds to us from the sale of the shares of Common Stock and Warrants before deducting underwriting discounts and commissions and offering expenses payable by the Company was $7,500,000. On the issuance date, the Company also granted an overallotment to the underwriters of the offering for 3,600,000 overallotment warrants ("September 2022 Overallotment Warrants"), at a purchase price of $0.01 per warrant, with an exercise price of $0.25 per warrant (the September 2022 Offering Warrants and September 2022 Overallotment Warrants are collectively referred to as the "September 2022 Warrants"). Total proceeds from the September 2022 Overallotment Warrants were $36,000. The Company remitted to the Holder an amount of $2,265,927 equal to fifty percent (50%) of all net proceeds above $2,000,000 following the payment of 7% in offering fees including underwriting discounts and commissions. In addition, as part of the September 2022 Offering, the Holder purchased $512,500 of securities (2,050,000 shares of Common Stock and 2,050,000 September 2022 Warrants) and the Company paid the Holder an additional $512,500. The proceeds remitted to the Holder of the Senior Convertible Note reduced the principal balance of the Senior Convertible Note on a dollar-for-dollar basis. The net proceeds received by the Company, after deducting underwriting discounts and commissions and offering expenses payable by the Company and amounts remitted to the Holder was $4,075,991.

On March 2, 2022 the Company closed an offering (the "March 2022 Offering") in which it sold 15,000,000 units at $1.00 consisting of one share of Common Stock and one warrant for a total of 15,000,000 warrants with an exercise price of $1.00 (the "March 2022 Offering Warrants"). There was also an overallotment option exercised to purchase warrants to purchase an additional 2,250,000 shares of common stock (the "April 2022 Overallotment Warrants") with an exercise price of $1.00 issued to the underwriters of the offering on April 1, 2022 (the March 2022 Offering Warrants and the April 2022 Overallotment Warrants are collectively referred to as the "March 2022 Warrants"). The March 2022 Offering provided net cash proceeds of $13,605,000.

The amount of available cash on hand on November 11, 2022, one business day preceding this filing, was $1,134,097.

The Company believes that its current level of cash and cash equivalents are not sufficient to fund its operations and obligations without additional financing. Although the Company has financing available, as further described below, the ability to raise financing using these sources is subject to several factors, including market and economic conditions, performance, and investor sentiment as it relates to the Company and the esports and iGaming industry. The combination of these conditions was determined to raise substantial doubt regarding the Company's ability to continue as a going concern for a period of at least one year from the date of issuance of these unaudited condensed consolidated financial statements.

In determining whether the Company can overcome the presumption of substantial doubt about its ability to continue as a going concern, the Company may consider the effects of any mitigating plans for additional sources of financing. The Company identified additional financing sources it believes, depending on market conditions, may be available to fund its operations and drive future growth, which include (i) the potential proceeds from the exercise of the 33,600,000 September 2022 Warrants, exercisable at $0.25, outstanding at September 30, 2022, (ii) the potential proceeds from the exercise of the 17,250,000 March 2022 Warrants, exercisable at $1.00, outstanding at September 30, 2022, (iii) the ability to sell shares of Common Stock of the Company through various forms of offerings, and (iv) the ability to raise additional financing from other sources. The Company is also continuing discussions with the Holder to restructure the payment terms and debt covenants.

Net cash provided by financing activities for the three months ended September 30, 2022 totaled $3,838,549, which related to $6,854,418 proceeds from the issuance of 30,000,000 units, each consisting of one share of Common Stock and one September 2022 Offering Warrant, as part of the September 2022 Offering, offset by the repayments of part of the senior convertible note principal of $2,778,427, repayments of notes payable and finance lease for $36,814 and the payments of the dividends on the 10% Series A cumulative redeemable convertible preferred stock of $200,628.

These above plans are likely to require the Company to place reliance on several factors, including favorable market conditions, to access additional capital in the future. These plans were therefore determined not to be sufficient to overcome the presumption of substantial doubt about the Company's ability to continue as a going concern. The unaudited condensed consolidated financial statements do not reflect any adjustments that might result from the outcome of this uncertainty.

**COVID-19**

The novel coronavirus ("COVID-19") emerged in December 2019 and has since adversely impacted global commercial activity, disrupted supply chains and contributed to significant volatility in financial markets.

The Company has previously indicated that a significant or prolonged decrease in consumer spending on entertainment or leisure activities may have an adverse effect on demand for the Company's product offerings, including in-person access to game centers and tournaments, reducing cash flows and revenues, and thereby materially harming the Company's business, financial condition and results of operations.

The ultimate impact of the COVID-19 pandemic on other areas of the business will depend on future developments, which are uncertain and may result in an extended period of continued business disruption and reduced operations. A materially disruptive resurgence of COVID-19 cases or the emergence of additional variants or strains of COVID-19 could cause other widespread or more severe impacts depending on where infection rates are highest. Any resulting financial impact cannot be reasonably estimated at this time but may have a material adverse impact on the Company's business, financial condition and results of operations. The Company will continue to monitor developments relating to disruptions and uncertainties caused by COVID-19.

**Nasdaq Continued Listing Rules or Standards**

On April 11, 2022, the Company received a deficiency notification letter from the Listing Qualifications Staff of the Nasdaq Stock Market (the "Nasdaq") indicating that the Company was not in compliance with Nasdaq Listing Rule 5550(a)(2) because the bid price for the Company's Common Stock had closed below $1.00 per share for the previous thirty consecutive business days.

On June 7, 2022, the Company received a further letter from the Nasdaq notifying the Company that for the last 30 consecutive business days, the Company's minimum Market Value of Listed Securities ("MVLS") was below the minimum of $35 million required for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(b)(2).

On October 11, 2022 the Company received a third letter from Nasdaq that the Company's Common Stock will be delisted, and the Company's Common Stock warrants traded under the symbols GMBLW and GMBLZ and the Company's 10% Series A cumulative redeemable convertible preferred stock traded under symbol GMBLP will no longer qualify for listing, and in that regard trading of the Company's Common Stock, Common Stock warrants and 10% Series A cumulative redeemable convertible preferred stock will be suspended. The Company requested an appeal and under the Nasdaq rules, while any appeal is pending, the suspension of trading of the Company's Common Stock, warrants and 10% Series A cumulative redeemable convertible preferred stock will be stayed and will continue to trade on Nasdaq until the Nasdaq hearing panel makes a determination after the hearing. The hearing is scheduled for November 17, 2022. As part of the compliance plan the Company is negotiating with the Holder to restructure the Senior Convertible Note, including the derivative liability. All listing deficiencies will be considered as part of the Company's compliance plan.

While the Company is exercising diligent efforts to maintain the listing of its Common Stock on Nasdaq, there can be no assurance that the Company will be able to regain or maintain compliance with the Nasdaq listing standards, or that it will not be delisted.

**Cash and Cash Equivalents**

Cash includes cash on hand. Cash equivalents consist of highly liquid financial instruments purchased with an original maturity of three months or less. As of September 30, 2022 and June 30, 2022, the Company did not have any financial instruments classified as cash equivalents. At times, cash deposits inclusive of restricted cash may exceed Federal Deposit Insurance Corporation ("FDIC") insured limits. Accounts are insured by the FDIC up to $250,000 per financial institution. There have been no losses recognized on cash balances held at these financial institutions.

**Restricted Cash**

Restricted cash includes cash reserves maintained for compliance with gaming regulations that require adequate liquidity to satisfy the Company's liabilities to customers.

**Accounts Receivable**

Accounts receivable is comprised of the amounts billed to customers principally for esports events and team management services. Accounts receivable is recorded net of an allowance for credit losses. The Company performs ongoing credit evaluations for its customers and determines the amount of the allowance for credit losses upon considering such factors as historical losses, known disputes or collectability issues, the age of a receivable balance as well as current economic conditions. Bad debt expense is recorded to maintain the allowance for credit losses at an appropriate level and changes in the allowance for credit losses are included in general and administrative expense in the unaudited condensed consolidated statements of operations. At September 30, 2022 and June 30, 2022, the allowance for credit losses was not material to the unaudited condensed consolidated financial statements of the Company.

**Receivables Reserved for Users**

User deposit receivables are stated at the amount the Company expects to collect from a payment processor. A user initiates a deposit with a payment processor, and the payment processor remits the deposit to the Company. The amount due from the payment processor is recorded as a receivable reserved for users on the unaudited condensed consolidated balance sheets. An allowance for doubtful accounts may be established if it is determined that the Company is unable to collect a receivable from a payment processor. An increase to the allowance for doubtful accounts is recognized as a loss within general and administrative expenses in the unaudited condensed consolidated statements of operations. The allowance for doubtful accounts is not material to the unaudited condensed consolidated financial statements.

**Equipment**

Equipment is stated at cost less accumulated depreciation. The Company capitalizes the direct cost of equipment as well as expenditures related to improvements and betterments that add to the productive capacity or useful life of the equipment. Depreciation is computed utilizing the straight-line method over the estimated useful life of the asset, or for leasehold improvements, the shorter of the initial lease term or the estimated useful life of the improvements. The estimated useful life of equipment by asset class follows:

Computer Equipment Up to 5 years <br> Furniture and fixtures Up to 7 years <br> Leasehold improvements Shorter of the remaining lease term or estimated life of the improvement

The estimated useful life and residual value of equipment are reviewed and adjusted, if appropriate, at the end of each reporting period. The costs and accumulated depreciation of assets that are sold, retired, or otherwise disposed of are removed from the accounts and the resulting gain or loss is recognized as a gain or loss on sale or disposition of assets in the unaudited condensed consolidated statements of operations.

**Digital Assets**

Digital assets for the period ended September 30, 2022 and the year ended June 30, 2022 comprised of Ethereum Classic cryptocurrency ("Ethereum Classic" or "ETC)" and Ethereum cryptocurrency ("Ethereum" or "ETH)", respectively. The digital assets are included in current assets in the accompanying unaudited condensed consolidated balance sheets. The classification of digital assets as a current asset has been made after the Company's consideration of the consistent daily trading volume on cryptocurrency exchange markets. There are no limitations or restrictions on the Company's ability to sell digital assets. Digital assets purchased are recorded at cost and cryptocurrencies awarded to the Company through its mining activities are accounted for in connection with the Company's revenue recognition policy disclosed below.

Digital assets held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital asset at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. Impairment losses of the Company's digital assets were not material to the unaudited condensed consolidated financial statements for the three months ended September 30, 2022 and September 30, 2021.

The Company accounts for its gains or losses in accordance with the first in first out (FIFO) method of accounting. The Company generally liquidates its digital assets position monthly, or more frequently depending upon the market conditions. The Company's recognized realized gains through the sale and disbursement of digital assets during the three months ended September 30, 2022 and 2021 and the amounts were not material to the unaudited condensed consolidated financial statements. At September 30, 2022 and June 30, 2022, the Company held no digital assets.

**Business Combinations**

The Company accounts for business combinations using the acquisition method of accounting. The Company records the assets acquired, liabilities assumed and acquisition-related contingent consideration at fair value on the date of acquisition. The difference between the purchase price, including any contingent consideration, and the fair value of net assets acquired is recorded as goodwill. The Company may adjust the preliminary purchase price and purchase price allocation, as necessary, during the measurement period of up to one year after the acquisition closing date as it obtains more information as to facts and circumstances that impact the determination of fair value at the acquisition date. Any change in fair value of acquisition-related contingent consideration resulting from events after the acquisition date is recognized in earnings. Acquisition-related costs are recognized separately from the acquisition and are expensed as incurred.

**Goodwill**

Goodwill represents the excess of fair value of consideration paid for an acquired entity over the fair value of the assets acquired and liabilities assumed in a business combination. Goodwill is not amortized but rather it is tested for impairment at the reporting unit level on an annual basis on April 1 for each fiscal year, or more often if events or changes in circumstances indicate that more likely than not the carrying amount of the asset may not be recoverable. A reporting unit represents an operating segment or a component of an operating segment. In accordance with ASC Topic 350 *Intangibles - Goodwill and Other*, as of September 30, 2022 the Company's business is classified into four reporting units: iGaming Malta (including Bethard and Lucky Dino), iGaming Argyll (UK), EGL, and GGC. The Helix business was sold as of June 10, 2022 and was previously its own reporting unit.

In testing goodwill for impairment, the Company has the option to begin with a qualitative assessment, commonly referred to as "Step 0," to determine whether it is more likely than not that the fair value of a reporting unit containing goodwill is less than its carrying value. This qualitative assessment may include, but is not limited to, reviewing factors such as macroeconomic conditions, industry and market considerations, cost factors, entity-specific financial performance and other events, including changes in the Company's management, strategy and primary user base. If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company then performs a quantitative goodwill impairment analysis by comparing the carrying amount to the fair value of the reporting unit. If it is determined that the fair value is less than its carrying amount, the excess of the goodwill carrying amount over the implied fair value is recognized as an impairment loss in accordance with Accounting Standards Update ("ASU") No. 2017-04, *Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment*. The Company utilizes a discounted cash flow analysis, referred to as an income approach, and uses internal and market multiples, to assess reasonableness of assumptions, to determine the estimated fair value of the reporting units. For the income approach, significant judgments and assumptions including anticipated revenue growth rates, discount rates, gross margins, operating expenses, working capital needs and capital expenditures are inherent in the fair value estimates, which are based on the Company's operating and capital forecasts. As a result, actual results may differ from the estimates utilized in the income approach. The use of alternate judgments and/or assumptions could result in a fair value that differs from the Company's estimate and could result in the recognition of additional impairment charges in the financial statements. As a test for reasonableness, the Company also considers the combined fair values of the Company's reporting units to a reasonable market capitalization of the Company. The Company may elect not to perform the qualitative assessment for some or all reporting units and perform a quantitative impairment test.

**Intangible assets**

Intangible assets with determinable lives consist of player relationships, developed technology and software, tradenames and gaming licenses. Intangible assets with determinable lives are amortized on a straight-line basis over their estimated useful lives of 5 years for player relationships and developed technology and software, 10 years for tradenames and 2 years for gaming licenses. The Company also capitalizes internal-use software costs such as external consulting fees, payroll and payroll-related costs and stock-based compensation for employees in the Company's development and information technology groups who are directly associated with, and who devote time to, the Company's internal-use software projects. Capitalization begins when the planning stage is complete and the Company commits resources to the software project and continues during the application development stage. Capitalization ceases when the software has been tested and is ready for its intended use. Costs incurred during the planning, training and post-implementation stages of the software development life cycle are expensed as incurred. The Company may also hold indefinite-lived intangible assets in the form of digital assets as discussed above in Digital Assets.

**Impairment of Long-Lived Assets**

Equipment and other long-lived assets, including finite lived intangibles, are evaluated for impairment periodically or when events and circumstances indicate that the carrying amount of an asset may not be recoverable. If an evaluation is required, an estimate of future undiscounted cash flows are determined through estimated disposition date of the asset. To the extent that estimated future undiscounted net cash flows attributable to the asset are less than the carrying amount, an impairment loss is recognized equal to the difference between the carrying value of such asset and its fair value, considering external market participant assumptions. An estimation of future cash flows requires significant judgment as the Company makes assumptions about future results and market conditions. Since the determination of future cash flows is an estimate of future performance, there may be impairments recognized in future periods in the event future cash flows do not meet expectations.

During the three months ended September 30, 2022 and 2021, the Company determined that there was no impairment on its long-lived assets.

**Liabilities to Customers**

The Company records liabilities to customers, also referred to as player liabilities, for the amounts that may be withdrawn by a player at a given time. The player liabilities include player deposits, bonuses or incentive awards and user winnings less withdrawals, tax withholdings and player losses. The Company maintains a restricted cash balance and player deposits held by third parties, recorded as receivables reserved for users on the unaudited condensed consolidated balance sheets, at levels equal to or exceeding its liabilities to customers.

**Jackpot Provision**

The jackpot provision liability is an estimate of the amount due to players for jackpot winnings. The jackpot liability is accrued monthly based on an estimate of the jackpot amount available for winning. The jackpot increases with each bet on a jackpot eligible iGaming casino machine and a portion of each losing bet is allocated towards the funding of the jackpot amount. Jackpots are programmed to be paid out randomly across certain casino brands. When a player wins a jackpot, the amount of the jackpot is reset to a defined amount that varies across eligible iGaming casino machines. Participating iGaming casino machines of the Company pool into the same jackpot and therefore the winning of a jackpot affects other players on the network of participating iGaming casino machines. Jackpot winnings reduce revenue at the time the entity has the obligation to pay the jackpot, which occurs when the jackpot is won by the player.

**Leases**

The Company leases office space through operating lease agreements that were a result of its acquisitions of Argyll and Lucky Dino. The Company previously leased game center space, other property and equipment, acquired through the Helix acquisition, that was sold as part of the Helix sale transaction on June 10, 2022, where the purchaser assumed the lease liabilities. The Company measures an operating lease right-of-use ("ROU") asset and liability, as well as a finance lease asset and liability, based on the present value of the future minimum lease payments over the lease term at the commencement date. Minimum lease payments include the fixed lease and non-lease components of the agreement, as well as any variable rent payments that depend on an index, initially measured using the index at the lease commencement date.

The minimum payments under operating leases are recognized on a straight-line basis over the lease term in the unaudited condensed consolidated statements of operations. Operating lease expenses related to variable lease payments are recognized as operating expenses in a manner consistent with the nature of the underlying lease and as the events, activities, or circumstances in the lease agreement occur. Leases with a term of less than 12 months ("short-term leases") are not recognized on the unaudited condensed consolidated balance sheets. The rent expense for short-term leases is recognized on a straight-line basis over the lease term and included in general and administrative expense on the unaudited condensed consolidated statements of operations.

**Income Taxes**

The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been recognized in the unaudited condensed consolidated financial statements or in the Company's tax returns. Deferred tax assets and liabilities are determined on the basis of the differences between U.S. GAAP treatment and tax treatment of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Changes in deferred tax assets and liabilities are recorded in the provision for income taxes. The Company assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by considering taxable income in carryback years, existing taxable temporary differences, prudent and feasible tax planning strategies and estimated future taxable profits.

The Company accounts for uncertainty in income taxes recognized in the unaudited condensed consolidated financial statements by applying a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination by the taxing authorities. If the tax position is deemed more-likely-than-not to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the unaudited condensed consolidated financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50% likelihood of being realized upon ultimate settlement. The provision for income taxes includes the effects of any resulting tax reserves, or unrecognized tax benefits, that are considered appropriate, as well as the related net interest and penalties.

**Derivative Instruments**

The Company evaluates its convertible notes, equity instruments and warrants, to determine if those contracts or embedded components of those contracts qualify as derivatives (Note 11). The result of this accounting treatment is that the fair value of the embedded derivative is recorded at fair value each reporting period and recorded as a liability (Note 16) in the unaudited condensed consolidated balance sheets. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the unaudited condensed consolidated statements of operations as other income or expense (Note 16).

In circumstances where the embedded conversion option in a convertible instrument is required to be bifurcated and there are also other embedded derivative instruments in the convertible instrument that are required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to a liability at the fair value of the instrument on the reclassification date. Derivative instrument liabilities are classified in the balance sheet as current or non-current to correspond with its host instrument. The Company records the fair value of the remaining embedded derivative at each balance sheet date and records the change in the fair value of the remaining embedded derivative as other income or expense in the unaudited condensed consolidated statements of operations.

**Fair Value Measurements**

Fair value is defined as the price that would be received for an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. Valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. When determining the fair value measurements for assets and liabilities, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability. The following summarizes the three levels of inputs required to measure fair value, of which the first two are considered observable and the third is considered unobservable:

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| | |
|:---|:---|
| Level 1: | Unadjusted quoted prices in active markets for identical assets or liabilities. |
| Level 2: | Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. |
| Level 3: | Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. |

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Certain assets and liabilities are required to be recorded at fair value on a recurring basis. The Company adjusts contingent consideration resulting from a business combination, derivative financial instruments and warrant liabilities, to fair value on a recurring basis. Certain long-lived assets may be periodically required to be measured at fair value on a nonrecurring basis, including long-lived assets that are impaired. The fair values for other assets and liabilities such as cash, restricted cash, accounts receivable, receivables reserved for users, other receivables, prepaid expenses and other current assets, accounts payable and accrued expenses, and liabilities to customers have been determined to approximate their carrying amounts due to the short maturities of these instruments. The fair values of the Senior Convertible Note and lease liabilities approximate their carrying value based on current interest and discount rates.

**Earnings Per Share**

Basic income (loss) per share is calculated using the two-class method. Under the two-class method, basic income (loss) is computed by dividing net income (loss) available to common stockholders by the weighted-average number of common shares outstanding during the period excluding the effects of any potentially dilutive securities. Diluted income (loss) per share is computed similar to basic income (loss) per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if potential common shares had been issued if such additional common shares were dilutive. Diluted income (loss) per share includes the effect of potential common shares, such as the Company's preferred stock, notes, warrants and stock options, to the extent the effect is dilutive. As the Company had net losses for all the periods presented, basic and diluted loss per share are the same, and additional potential common shares have been excluded, as their effect would be anti-dilutive.

The following securities were excluded from weighted average diluted common shares outstanding for the three months ended September 30, 2022 and 2021 because their inclusion would have been antidilutive:

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| | | |
|:---|:---|:---|
|  | **As of September 30,** | **As of September 30,** |
|  | **2022** | **2021** |
| Common stock options | 981126 | 466176 |
| Common stock warrants | 56200558 | 5350558 |
| Common stock issuable upon conversion of senior convertible note | 14758874 | 2120000 |
| 10% Series A cumulative redeemable convertible preferred stock | 835950 | - |
| Total | 72776508 | 7936734 |

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**Comprehensive Loss**

Comprehensive loss consists of the net loss for the year and foreign currency translation adjustments related to the effect of foreign exchange on the value of assets and liabilities. The net translation loss for the year is included in the unaudited condensed consolidated statements of comprehensive loss.

**Stock-based Compensation**

The Company periodically issues stock-based compensation to employees, directors, contractors and consultants for services rendered. Stock-based compensation granted to employees and non-employee directors includes grants of restricted stock and employee stock options that are measured and recognized based on their fair values determined on the grant date. The award of restricted stock and stock options, which are generally time vested, are measured at the grant date fair value and charged to earnings on a straight-line basis over the vesting period. The fair value of stock options is determined utilizing the Black-Scholes option-pricing model, which is affected by several variables, including the risk-free interest rate, the expected dividend yield, the expected life of the equity award, the exercise price of the stock option as compared to the fair market value of the Common Stock on the grant date, and the estimated volatility of the Common Stock over the term of the equity award. The fair value of restricted stock is determined by the closing market price of the Company's Common Stock on the date of grant. The compensation cost for service-based stock options granted to consultants is measured at the grant date, based on the fair value of the award, and is expensed on a straight-line basis over the requisite service period (the vesting period of the award).

**Revenue and Cost Recognition**

The revenue of the Company is currently generated from online casino and sports betting (referred to herein as "EEG iGaming revenue"), and esports revenue (referred to herein as "EEG Games Revenue"), consisting of the sales of subscriptions to access cloud-based software used by independent operators of game centers, from consulting and data analytic services provided to game operators ("EEG Games Esports and Other Revenue"), and from the provision of esports event and team management services ("EEG Games Esports Event Management and Team Service Revenue"). The Company recognizes revenue in accordance with Accounting Standards Codification ("ASC") Topic 606 – *Revenue from Contracts with Customers* ("ASC 606") when control of a product or service is transferred to a customer. The amount of revenue is measured at the transaction price, or the amount of consideration that the Company expects to receive in exchange for transferring a promised good or service. The transaction price includes estimates of variable consideration to the extent that it is probable that a significant reversal of revenue recognized will not occur.

Revenue generating activities of the Company may be subject to value added tax ("VAT") in certain jurisdictions in which the Company operates. Revenue is presented net of VAT in the unaudited condensed consolidated statements of operations. VAT receivables and VAT payables are included in other receivables and accounts payable and accrued expenses, respectively on the unaudited condensed consolidated balance sheets. Sales to customers do not have significant financing components or payment terms greater than 12 months.

***EEG iGaming Revenue***

EEG iGaming revenue is derived from the placement of bets by end-users, also referred to as customers, through online gaming sites. The transaction price in an iGaming contract, or Net Gaming Revenue ("NGR"), is the difference between gaming wins and losses, as further reduced by any nondiscretionary incentives awarded to the customer. Gaming transactions involve four performance obligations, namely the settlement of each individual bet, the honoring of discretionary incentives available to the customer through loyalty reward programs, the award of free spin and deposit match bonuses, and the winning of a casino jackpot. The total amount wagered by a customer is commonly referred to as the win or Gross Gaming Revenue ("GGR"). The GGR is allocated to each performance obligation using the relative standalone selling price ("SSP") determined for iGaming contracts.

Revenue recognition for individual wagers is recognized when the gaming occurs, as such gaming activities are settled immediately. The revenue allocated to incentives, such as loyalty points offered through a rewards program, is deferred and recognized as revenue when the loyalty points are redeemed. Revenue allocated to free spins and deposit matches, referred to as bonuses, are recognized at the time that they are wagered. The revenue for jackpot games is recognized when the jackpot is won by the customer. The Company applies a practical expedient by accounting for its performance obligations on a portfolio basis as iGaming contracts have similar characteristics. The Company expects the application of the revenue recognition guidance to a portfolio of iGaming contracts will not materially differ from the application of the revenue recognition guidance on an individual contract basis.

The Company evaluates bets that its users place on websites owned by third party brands in order to determine whether it may recognize revenue on a gross basis, when acting as the principal provider of the wagering service, or on a net basis, when acting as an intermediary or agent. The principal in a wagering service involving a third party is generally the entity that controls the wagering service such that it has a right to the services being performed by the third party and can direct the third party in delivery of the service to its users. The Company records revenue on a gross basis as it has determined it is the principal in transactions involving third parties, such as revenue sharing arrangements, as it controls the wagering service being offered to the users such that it has a right to the service performed by third parties and can further direct third parties in providing services to users. The Company further records expenses related to its revenue sharing arrangements and other third-party iGaming expenses within costs of revenue in the unaudited condensed consolidated statements of operations.

 **

***EEG Games Revenue***

 **

*EEG Games Esports and Other Revenue*

The Company derives revenue from sales of subscriptions to access cloud-based software used by independent operators of game centers, as well as from consulting and data analytic services provided to game operators. The revenue derived from the sale of subscription services to cloud-based software used by game centers is recognized over the term of the contract, which generally can range from one month to one year in duration, beginning on the date the customer is provided access to the Company's hosted software platform. The revenue from the operation of game centers by the Company is recognized when a customer purchased time to use the esports gaming equipment at each center. The revenue from time purchased by a customer and from the sale of concessions is recognized at the point of sale.

The software subscriptions also allow for game center operators to enable their equipment to mine cryptocurrency when gaming stations are not in use by the end user. The software allows the participating game center operators to contribute their computer power for the purpose of adding a block to the blockchain within a mining pool where the Company and the participating game center operators are participants. The Company's software enables the participating game center operators to enter into mining pools with mining pool operators to provide computing power to the mining pool to mine cryptocurrency digital assets. The Company and the participating game center operators are entitled to a fractional share of the fixed cryptocurrency digital asset award the mining pool operator receives (less transaction fees to the mining pool operator) for successfully adding a block to the blockchain. The Company and participating game center operators' fractional share is based on the proportion of computing power contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. A digital asset award is received by the Company from the mining pool, in the form of crypto currency (i.e., Ethereum), for successfully adding a block to the blockchain. The Company records a payable for the amount due to each participating game center operator, in the form of U.S. dollars, based on the participating game center operators' computing power contributed toward the mining of the award less a fee charged by the Company. The amounts due to the participating game center operators are paid in U.S. dollars. The Company recognizes the fair value of the digital awards, net of fees and amounts payable to the game center operators, as revenue at the time the digital award is added to the blockchain using the price of the digital coin quoted in U.S. dollars. The transaction consideration of the digital award the Company receives, if any, is non-cash consideration. The Company records revenue on a net basis as it has determined it is the agent in the transactions with the mining pool and facilitates the provision of the computing power and payments for the participating game center operators. The transaction consideration for the mining of cryptocurrency is variable consideration as it is based on the number of blocks added to the blockchain and the amount of the digital asset received from the mining pool. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the mining pool operator successfully places a block and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is currently no specific definitive guidance under U.S. GAAP or an alternative accounting framework for the accounting for digital assets recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the Financial Accounting Standards Board ("FASB"), the Company may be required to change its policies, which could impact the Company's unaudited condensed consolidated financial position and results from operations.

The Company further provides consultation services related to the use of hardware and equipment for gaming operations together with implementation services that include sourcing, training, planning, and installation of technology. The Company considers services related to hardware and equipment, implementation, and any design of user interface for the customer as separate performance obligations. Revenue for hardware equipment and design of custom user interface is recognized at a point in time upon delivery and completion. Implementation services are recognized over time, as services are performed.

The Company also has contracts with software companies to provide talent data analytics and related esports services, which include analytic development, other related services to develop software and applications for tournaments, and to provide data support, data gathering, gameplay analysis and reporting which includes talent analytics and related esports services, including analytic development, data analysis, survey design, interview services, player dossiers, and expert services. The Company recognizes revenue from its data analytic services over the life of the contract utilizing the output method, using a direct measurement of the value to the customer of the goods or services transferred to date relative to the remaining goods or services promised under the contact. The Company elected to use the right to invoice practical expedient and recognize revenue based on the amounts invoiced. The payment terms and conditions vary by contract; however, the Company's terms generally require payment within 30 to 60 days from the invoice date.

The Company has partnership contracts with strategic customers within the esports industry. The partnership contracts are negotiated agreements, which contain both licensing arrangements of intellectual property and development services, including fixed and variable components. The variability of revenue is driven by development plans and results of sales as specified by the partnership contract, which are known as of an invoice date. Partnership contracts generally do not have terms that extend beyond one year. The Company considers licensing arrangements and development services as separate performance obligations. Licensing revenues are recorded over time. Revenue associated with development is recognized over time, as labor is incurred.

Contracts that contain multiple performance obligations require an allocation of the transaction price to each distinct performance obligation based on a relative standalone selling price basis unless the transaction price is variable and meets the criteria to be allocated entirely to a performance obligation or to a distinct good or service that forms part of a single performance obligation. The Company determines standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, the Company estimates the standalone selling price taking into account the Company's overall pricing objectives, considering market conditions and other factors, including the value of the deliverables in the contracts, customer demographics, geographic locations, and the number and types of users within the contracts.

*EEG Games Esports Event Management and Team Service Revenue*

The Company derives revenue from esports event management and team services. Esports event management services support the creation, production and delivery of an esports event by providing event staffing, gaming consoles, and other technical goods and services for a customer event that is either hosted live in person or online. The revenue generated from esports event management services is generally earned on a fixed fee basis per event.

The esports team services offerings of the Company include recruitment and management services offered to sports clubs to facilitate their entrance into esports tournament competition. Team services provided to a customer may include player recruitment, administration of player contracts, processing of tournament admission, providing logistical arrangements, as well as providing ongoing support to the team during the event. Team services are earned on a fixed fee basis per tournament.

Esports event management and team services revenues are recognized over the term of the event or the relevant contractual term for services as this method best depicts the transfer of control to the customer. The Company recognizes revenue for event management services based on the number of days completed for the event relative to the total days of the event. Revenue from team management services is recognized from inception of the contract through the end of the tournament using the number of days completed relative to the total number of days in the contract term. Revenue collected in advance of the event management or team services is recorded as deferred revenue on the unaudited condensed consolidated balance sheets. The Company may also enter into profit sharing arrangements which are determined based on the net revenue earned by the customer for an event in addition to a fixed fee. Revenue recognition for profit sharing arrangements is recognized at the time the revenue from the event is determined, which is generally at the conclusion of the event. An event or team services contract may further require the Company to distribute payments to event or tournament attendees resulting in the recognition of a processing fee by the Company. The Company does not recognize revenue from the processing of payments until the conclusion of the event or tournament.

The Company evaluates the service being provided under an esports event and team services contract to determine whether it should recognize revenue on a gross basis as the principal provider of the service, or on a net basis in a manner similar to that of an agent. The Company has determined that for esports event and team services contracts that allow for the assignment of individual tasks to a third-party contractor, the Company acts as the principal provider of the service being offered to the customer as it remains primarily responsible for fulfilling the contractual promise to the customer. In profit sharing arrangements, such as events that allow for the Company to share in the revenue earned by a customer for an event, the Company has determined it acts in the role of an agent to the customer as the event creator. The Company has also determined it acts as an agent when it collects a processing fee for performing the service of distributing prize money on behalf of its customers to event or tournament winners.

 ****

***Contract Liabilities***

Liabilities to customers include both player liabilities, consisting of a free spin bonus and a deposit match bonus, and the player reward liabilities. The free spin bonus provides the user the opportunity to a free play, or otherwise spin, on an iGaming casino slot machine without withdrawing a bet amount from the player's account. The deposit match bonus matches a player's deposit up to a certain specified percentage or amount. These bonuses represent consideration payable to a customer and therefore are treated as a reduction of the transaction price in determining NGR. The Company also offers non-discretionary loyalty rewards points to customers that can be redeemed for free play or cash. The Company allocates revenue from wagers to loyalty points rewards earned by users, thereby deferring a portion of revenue from users that participate in a loyalty reward program. The amount of revenue deferred related to loyalty points available to users is based on the estimated fair value of the loyalty point incentive available to the user.

The Company also records payments received in advance of performance under an esports gaming services contract or event management or team services contract as deferred revenue.

**Recently Adopted Accounting Pronouncements**

In May 2021, the FASB issued ASU 2021-04, *Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40).* The standard clarifies and reduces diversity in an issuer's accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange. An entity should treat a modification of the terms or conditions or an exchange of a freestanding equity-classified written call option that remains equity classified after modification or exchange as an exchange of the original instrument for a new instrument. The guidance is effective for the fiscal years beginning after December 15, 2021. The Company adopted this standard as of July 1, 2022. The adoption of this guidance did not have a material impact on the accompanying unaudited condensed consolidated financial statements.

In June 2020, the FASB issued ASU No. 2020-06, *Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging – Contracts in Entity's Own Equity (Subtopic 815-40).* This standard eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity's own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance modifies how particular convertible instruments and certain contracts that may be settled in cash or shares impact the diluted EPS computation. For public business entities, it is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years using the fully retrospective or modified retrospective method. The Company adopted this standard as of July 1, 2022. The adoption of this guidance did not have a material impact on the accompanying unaudited condensed consolidated financial statements.

**Recently Issued Accounting Standards**

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805): *Accounting for Contract Assets and Contract Liabilities from Contracts with Customers*, which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities in accordance with ASC Topic 606. The guidance is effective for fiscal years beginning after December 15, 2022 and early adoption is permitted. The Company is currently evaluating the potential impact of this standard on its unaudited condensed consolidated financial statements and it does not expect the guidance to have a material effect on its unaudited condensed consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, *Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments*. The amendments included in ASU 2016-13 require the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. Although the new standard, known as the current expected credit loss ("CECL") model, has a greater impact on financial institutions, most other organizations with financial instruments or other assets (trade receivables, contract assets, lease receivables, financial guarantees, loans and loan commitments, and held-to-maturity (HTM) debt securities) are subject to the CECL model and will need to use forward-looking information to better evaluate their credit loss estimates. Many of the loss estimation techniques applied today will still be permitted, although the inputs to those techniques will change to reflect the full amount of expected credit losses. In addition, the ASU amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. ASU 2016-13 was originally effective for public companies for fiscal years beginning after December 15, 2019. In November of 2019, the FASB issued ASU 2019-10, *Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates*, which delayed the implementation of ASU 2016-13 to fiscal years beginning after December 15, 2022, including interim periods within those fiscal years for smaller reporting companies. The Company is currently evaluating the impact that the adoption of this guidance will have on its unaudited condensed consolidated financial statements.

From time to time, new accounting pronouncements are issued by the FASB or other standard setting bodies that the Company adopts as of the specified effective date. The Company does not believe that the impact of recently issued standards that are not yet effective will have a material impact on the Company's financial position or results of operations upon adoption.

**Note 3 – Other Receivables**

The components of other receivables are as follows:

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| | | |
|:---|:---|:---|
|  | **September 30, 2022** | **June 30, 2022** |
| Indirect taxes | $453864 | $306040 |
| Other | 584827 | 66243 |
| Other receivables | $1038691 | $372283 |

---

**Note 4 – Prepaid Expenses and Other Current Assets**

The components of prepaid expenses and other current assets are as follows:

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| | | |
|:---|:---|:---|
|  | **September 30, 2022** | **June 30, 2022** |
| Prepaid marketing costs | $50625 | $298300 |
| Prepaid insurance | 240364 | 230404 |
| Prepaid gaming costs | 408393 | 575113 |
| Accrued income | 131259 | 110613 |
| Other | 325944 | 328623 |
| Prepaid expenses and other current assets | $1156585 | $1543053 |

---

**Note 5 – Equipment**

The components of equipment are as follows:

---

| | | |
|:---|:---|:---|
|  | **September 30, 2022** | **June 30, 2022** |
| Computer equipment | $36612 | $35911 |
| Furniture and equipment | 32220 | 34526 |
| Equipment, at cost | 68832 | 70437 |
| Accumulated depreciation and finance lease amortization | (30308) | (26512) |
| Equipment, net | $38524 | $43925 |

---

Depreciation expense and finance lease amortization expense was $22,413 and $46,736 for the three months ended September 30, 2022 and 2021, respectively.

**Note 6 – Goodwill and Intangible Assets**

A summary of the changes in the balance of goodwill by segment is as follows:

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| | | | |
|:---|:---|:---|:---|
|  | EEG iGaming | EEG Games | Total |
| Goodwill, balance as of June 30, 2022 | 19660481 | 2614832 | 22275313 |
| Foreign currency translation | (1282038) | - | (1282038) |
| &nbsp;&nbsp;&nbsp;Goodwill, balance as of September 30, 2022 | $18378443 | $2614832 | $20993275 |

---

There were no asset impairment charges for goodwill or long-lived assets, including definite-lived intangible assets, for the three months ended September 30, 2022 or 2021.

The intangible amounts comprising the intangible asset balance are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **September 30, 2022** | **September 30, 2022** | **September 30, 2022** | **June 30, 2022** | **June 30, 2022** | **June 30, 2022** |
|  | **Gross Carrying Amount** | **Accumulated Amortization** | **Net Carrying Amount** | **Gross Carrying Amount** | **Accumulated Amortization** | **Net Carrying Amount** |
| Tradename | $5505953 | $(681633) | $4824320 | $5835512 | $(578960) | $5256552 |
| Developed technology and software | 9718731 | (2355233) | 7363498 | 10109366 | (1935018) | 8174348 |
| Gaming licenses | 1229584 | (876721) | 352863 | 1317567 | (774760) | 542807 |
| Player relationships | 19545303 | (5422032) | 14123271 | 20920029 | (4757813) | 16162216 |
| Internal-use software | 222888 | (14908) | 207980 | 225086 | (14520) | 210566 |
| Total | $36222459 | $(9350527) | $26871932 | $38407560 | $(8060653) | $&nbsp;&nbsp;&nbsp;&nbsp;30346489 |

---

During the three months ended September 30, 2022 and 2021, the Company recorded amortization expense for its intangible assets of $1,840,305 and $3,184,000, respectively. The amortization for EEG iGaming segment was $1,591,740 and $2,274,000, and for the EEG Games segment was $248,565 and $910,000, for the three months ended September 30, 2022 and 2021, respectively.

The estimated future amortization related to definite-lived intangible assets is as follows:

---

| | |
|:---|:---|
| Fiscal 2023 | $5315160 |
| Fiscal 2024 | 6603585 |
| Fiscal 2025 | 6603585 |
| Fiscal 2026 | 5546899 |
| Fiscal 2027 | 632591 |
| Thereafter | 2170112 |
| Total | $26871932 |

---

**Note 7 – Other Non-Current Assets**

The components of other non-current assets are as follows:

---

| | | |
|:---|:---|:---|
|  | **September 30, 2022** | **June 30, 2022** |
| iGaming regulatory deposits | $1587526 | $1715053 |
| iGaming deposit with service providers |  | 261825 |
| Rent deposit | 73573 | 80520 |
| Other | 4364 | 4778 |
| Other non-current assets | $1665463 | $2062176 |

---

**Note 8 – Accounts Payable and Accrued Expenses**

The components of accounts payable and accrued expenses are as follows:

---

| | | |
|:---|:---|:---|
|  | **September 30, 2022** | **June 30, 2022** |
| Trade accounts payable | $4910175 | $5069616 |
| Accrued marketing | 2189364 | 2388987 |
| Accrued payroll and benefits | 781999 | 833322 |
| Accrued gaming liabilities | 564729 | 446626 |
| Accrued professional fees | 328549 | 555967 |
| Accrued jackpot liabilities | 276855 | 297970 |
| Accrued other liabilities | 3239999 | 2751564 |
| Total | $12291670 | $12344052 |

---

**Note 9 – Related Party Transactions**

The Company reimburses the Chief Executive Officer for office rent and related expenses. The Company incurred charges owed to the Chief Executive Officer for office expense reimbursement of $1,200 for the three months ended September 30, 2022 and 2021. As of September 30, 2022 and 2021, there were no amounts payable to the Chief Executive Officer.

The Company retained the services of its Chief Financial Officer through a consultancy agreement dated April 2, 2022 and an employment agreement dated April 2, 2022. The Company remits monthly payments to its Chief Financial Officer of NZD 36,995 ($20,854 translated using the exchange rate in effect at September 30, 2022) under the consultancy agreement and $500 per month under the employment agreement.

On May 4, 2017, the Company entered into a services agreement and a referral agreement with Contact Advisory Services Ltd., an entity that is partly owned by a member of the Board of Directors. The Company incurred general and administrative expenses of $2,935 and $11,109 for three months ended September 30, 2022 and 2021, respectively, in accordance with these agreements. As of September 30, 2022 and 2021, there were $2,935 and $0 amounts payable to Contact Advisory Services Ltd, respectively.

The Company has retained services from a former member of its Board of Directors who remained as an advisor to the Company with an annual fee of $60,000. The member was previously retained through a consultancy agreement dated August 1, 2020 and an employment agreement dated June 15, 2020. The consultancy agreement required payments of £18,000 ($20,028 translated using the exchange rate in effect at September 30, 2022) per month to the firm that is controlled by this member of the Board of Directors. The individual also received payroll of $500 per month through the employment agreement as Chief Operating Officer. The member resigned from the Board of Directors and from his role as Chief Operating Officer on May 31, 2022 and the consultancy agreement and the employment agreement were terminated.

During the three months ended September 30, 2021, the Company engaged in transactions with Tilt, LLC a game center operator controlled by the head of GGC. This included net sales to Tilt, LLC in the amount of $153,814 for game center equipment, and amounts paid to Tilt, LLC of $11,200 for equipment leased, $3,526 for services and $9,349 for cryptocurrency mining. The individual was no longer employed by the Company during the three months ended September 30, 2022.

**Note 10 – Leases**

The Company leases office and building space and equipment under operating lease agreements. The Company previously leased computer equipment under finance lease agreements that was disposed of in June 2022. The Company's lease agreements have terms not exceeding five years. Certain leases contain options to extend that are assessed by management at the commencement of the lease and are included in the lease term if the Company is reasonably certain of exercising.

In July 2021, the Company commenced a lease for office space of approximately 284 square meters in Saint Julians, Malta over a 3-year lease term. The lease has an annual expense of €83,000 ($81,209 translated using the exchange rate in effect at September 30, 2022), increasing 4% annually. At lease inception, the Company determined it was not reasonably certain to exercise any of the options to extend. In October 2021, the Company commenced a lease for building space of approximately 3,200 square feet at the University of California in Los Angeles over a 5-year lease term. The lease has an annual expense of $17,500, increasing 3% annually. At lease inception, the Company determined it was not reasonably certain to exercise any of the options to extend.

The consolidated balance sheet allocation of assets and liabilities related to operating and finance leases is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Condensed Consolidated Balance**<br> **Sheet Caption** | **September 30, 2022** | **June 30, 2022** |
| **Assets:** |  |  |  |
| Operating lease assets | Operating lease right-of-use assets | $134151 | $164288 |
| &nbsp;&nbsp;&nbsp;Total lease assets |  | $134151 | $164288 |
| **Liabilities:** |  |  |  |
| Current: |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | Operating lease liability - current | $358900 | $364269 |
| Long-term: |  |  |  |
| &nbsp;&nbsp;&nbsp;Operating lease liabilities | Operating lease liability - non-current | 606261 | 669286 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total lease liabilities |  | $965161 | $1033555 |

---

The operating lease expense for the three months ended September 30, 2022 was $37,254. The operating lease expense and finance lease expense for the three months ended September 30, 2021 were $114,903 and $14,752, respectively. The rent expense for short-term leases was not material to the unaudited condensed consolidated financial statements.

Weighted average remaining lease terms and discount rates follow:

---

| | | |
|:---|:---|:---|
|  | **September 30, 2022** | **June 30, 2022** |
| **Weighted Average Remaining Lease Term (Years):** |  |  |
| &nbsp;&nbsp;&nbsp;Operating leases | 3.66 | 3.87 |
| **Weighted Average Discount Rate:** |  |  |
| &nbsp;&nbsp;&nbsp;Operating leases | 8.00% | 8.00% |

---

The future minimum lease payments at September 30, 2022 follows:

---

| | |
|:---|:---|
|  | **Operating Lease** |
| Remainder of fiscal 2023 | $336354 |
| Fiscal 2024 | 306484 |
| Fiscal 2025 | 222789 |
| Fiscal 2026 | 229473 |
| Total lease payments | 1095100 |
| Less: imputed interest | (129939) |
| Present value of lease liabilities | $965161 |

---

**Note 11 – Long-Term Debt**

**Notes payable and other long-term debt**

The components of notes payable and other long-term debt follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Maturity** | **Interest Rate as of<br> September 30, 2022** | **September 30, 2022** | **June 30, 2022** |
| Notes payable | April 30, 2023 | 3.49% | $92726 | $139538 |
| Total |  |  | 92726 | 139538 |
| Less current portion of notes payable and long-term debt |  |  | (92726) | (139538) |
| Notes payable and other long-term debt |  |  | $- | $- |

---

In connection with its acquisition of Argyll on July 31, 2020, the Company assumed a note payable of £250,000 ($327,390 translated using the exchange rate in effect at the acquisition date). The term loan was issued on April 30, 2020 and has a maturity of 3 years, bears interest at 3.49% per annum over the Bank of England base rate, and is secured by the assets and equity of Argyll. The monthly principal and interest payments on the note payable commenced in June 2021 and continue through May 2023. The principal balance of the notes payable on September 30, 2022 was £83,333 ($92,726 translated using the exchange rate in effect at September 30, 2022). Interest expense on the note payable was $964 and $1,101 for the three months ended September 30, 2022 and 2021, respectively.

The maturities of long-term debt are as follows:

---

| | |
|:---|:---|
| Fiscal 2023 | $92726 |
| Total | $92726 |

---

**Senior Convertible Note**

On February 22, 2022, the Company exchanged the existing senior convertible note (the "Old Senior Convertible Note") with a remaining principal of $29,150,001, with the Senior Convertible Note in the aggregate principal of $35,000,000. As part of the September 2022 Offering (Note 15), the Company remitted to the Holder an amount of $2,778,427 from the proceeds reducing the Senior Convertible Note principal balance to $32,221,573 as recorded in the unaudited condensed consolidated balance sheet as of September 30, 2022 from the $35,000,000 as of June 30, 2022.

The interest rate on the Senior Convertible Note is 8.0% per annum (consistent with the Old Senior Convertible Note), and from and after the occurrence and during the continuance of any Event of Default (as defined in the Senior Convertible Note), the interest rate shall automatically be increased to 12.0% per annum. As further described below, the Company was not in compliance with certain debt covenants under the Senior Convertible Note as of September 30, 2022 or subsequently. The Company has been accruing interest expense at a rate of 12% beginning March 31, 2022, the date it was initially not in compliance with certain debt covenants, as compared to using the set rate of 8.0%, and has recorded the additional $700,000 interest accrual for the difference in rates in accounts payable and accrued expenses in the unaudited condensed consolidated balance sheet as of September 30, 2022, with $350,000 recorded in interest expense in the unaudited condensed consolidated statement of operations for the three months ended September 30, 2022. The maturity date of the Senior Convertible Note is June 2, 2023, subject to extension in certain circumstances, including bankruptcy and outstanding events of default. The Company may redeem the Senior Convertible Note, subject to certain conditions, at a price equal to 100% of the outstanding principal balance outstanding, together with accrued and unpaid interest and unpaid late charges thereon.

The Senior Convertible Note is convertible, at the option of the Holder, into shares of the Company's Common Stock at a conversion price of $17.50 per share. The Senior Convertible Note is subject to a most favored nations provision and standard adjustments in the event of any stock split, stock dividend, stock combination, recapitalization or other similar transaction. If the Company enters into any agreement to issue (or issues) any variable rate securities, the Holder has the additional right to substitute such variable price (or formula) for the conversion price.

If an Event of Default has occurred under the Senior Convertible Note, in addition to the default interest rate discussed above, the Holder may elect to alternatively convert the Senior Convertible Note at the Alternate Conversion Price (as defined in the Senior Convertible Note). In connection with an Event of Default, the Holder may require the Company to redeem in cash any or all of the Senior Convertible Note. The redemption price will equal 106% of the outstanding principal of the Senior Convertible to be redeemed, and accrued and unpaid interest and unpaid late charges thereon, or an amount equal to market value of the shares of the Company's Common Stock underlying the Senior Convertible Note, as determined in accordance with the Senior Convertible Note, if greater. The Holder will not have the right to convert any portion of a Senior Convertible Note, to the extent that, after giving effect to such conversion, the Holder (together with certain related parties) would beneficially own in excess of 4.99% of the shares of the Company's Common Stock outstanding immediately after giving effect to such conversion. The Holder may from time to time increase this limit to 9.99%, provided that any such increase will not be effective until the 61st day after delivery of a notice to the Company of such increase. The Company is currently in default and the Holder has not yet elected to alternatively convert.

In addition, unless approval of the Company's stockholders as required by the Nasdaq is obtained, the Company is prohibited from issuing any shares of Common Stock upon conversion of the Senior Convertible Note or otherwise pursuant to the terms of the Senior Convertible Note, if the issuance of such shares of Common Stock would exceed 19.99% of the Company's outstanding shares of Common Stock or otherwise exceed the aggregate number of shares of Common Stock which the Company may issue without breaching its obligations under the rules and regulations of Nasdaq. Should the Holder convert the principal balance outstanding at September 30, 2022 at the Alternate Conversion Price that is currently available to the Holder, or a portion of the principal balance, the Company may be subject to remit amounts to the Holder materially in excess of the principal balance outstanding through payment of cash. Refer to the Alternate Conversion discussion below for further information of this settlement option available to the Holder.

In connection with a Change of Control (as defined in the Senior Convertible Note), the Holder may require the Company to redeem all or any portion of the Senior Convertible Note. The redemption price per share will equal the greatest of (i) 115% of the outstanding principal of the Senior Convertible Note to be redeemed, and accrued and unpaid interest and unpaid late charges thereon, (ii) 115% of the market value of the shares of the Company's Common Stock underlying the Senior Convertible Note, as determined in accordance with the Senior Convertible Note, and (iii) 115% of the aggregate cash consideration that would have been payable in respect of the shares of the Company's Common Stock underlying the Senior Convertible Note, as determined in accordance with the Senior Convertible Note.

At any time after the date the Company provides notice to the Holder of the Company incurring additional debt, the Holder will have the right to have the Company redeem all or a portion of the Senior Convertible Note at a redemption price of 100% of the portion of the Senior Convertible Note subject to redemption.

The Senior Convertible Note agreement includes provision that should the Company be in both breach of its debt covenants and its price per common share trade below the conversion floor price of $2.1832 (the "Conversion Floor Price"), the Holder may elect the Alternate Conversion option that includes a make-whole provision payable to the Holder in cash. At March 31, 2022, June 30, 2022, September 30, 2022 and through the date of issuance of this report, both the Company was in breach of its debt covenants and the price per share of its Common Stock had declined below the Conversion Floor Price. As a result, the make whole provision in the Senior Convertible Note was determined to represent an obligation of the Company under the terms of the Senior Convertible Note. At September 30, 2022 and June 30, 2022, the Company estimates it would be required to issue up to 14,758,874 and 16,031,513 shares of Common Stock under the Alternate Conversion make whole provision of the Senior Convertible Note, respectively. At September 30, 2022, the Company also estimates the fair value of the derivative liability, which gives effect to the cash amount payable to the Holder under the Alternate Conversion make-whole provisions of the Senior Convertible Note, to be $9,124,756. While the Company records a derivative liability at each reporting period for the amount contingently payable to the Holder under the Alternate Conversion make-whole provision, a strict application of the formula in the Senior Convertible Note indicates the cash liability to the Holder may be materially higher than the derivative liability. A calculation of the cash liability due to the Holder under the Alternate Conversion make-whole provision of the Senior Convertible Note indicated a liability of approximately $606,000,000 at September 30, 2022. The derivative liability amount recognized by the Company for its obligation to the Holder under the Alternate Conversion make-whole provision of the Senior Convertible Note is subject to material fluctuation at each reporting date. The output of the Monte Carlo model that is used to estimate the fair value of the derivative liability will fluctuate based on the Company's share price, market capitalization, estimated enterprise value, and the Company's estimate of credit and non-performance risk.

Under the Senior Convertible Note, and consistent with the Old Senior Convertible Note, the Company is subject to certain customary affirmative and negative covenants regarding the incurrence of indebtedness, the existence of liens, the repayment of indebtedness, the payment of cash in respect of dividends, distributions or redemptions, and the transfer of assets, among other matters. The Company is also subject to certain financial debt covenants relating to available cash, minimum annual revenues, ratio of debt to market capitalization and minimum cash flow.

The Senior Convertible Note is subject to a most favored nation provision and standard adjustments in the event of any stock split, stock dividend, stock combination, recapitalization or other similar transaction. If the Company enters into any agreement to issue, or issue any variable rate securities, the Holder of the Senior Convertible Note has the additional right to substitute such variable price (or formula) for the conversion price. If the Holder were to substitute a floor price of $2.1832 ("Conversion Floor Price") as the variable price, the Company would be required to settle in cash any difference between the market value of the shares subject to conversion at the floor price and the market value of the shares using the variable price, excluding any reference to the floor. The Holder of the Senior Convertible Note also has the right to have the Company redeem all or a portion of the Senior Convertible Note should the Company provide notice of incurring additional debt.

If an Event of Default occurs, the Holder of the Senior Convertible Note has the right to alternate conversion ("Alternate Conversion") and may elect to convert the Senior Convertible Note, inclusive of a 15% premium payable ("Incremental Premium") in cash due upon such an acceleration of the applicable principal, at a price ("Alternate Conversion Price") equal to the greater of the Conversion Floor Price of $2.1832 or a price derived from the volume weighted average price of the Company's Common Stock at the time of Alternate Conversion. If the Alternate Conversion were to include the Conversion Floor Price of $2.1832 as the Alternate Conversion Price, the Company would be required to settle in cash any difference between the market value of the shares subject to the Alternate Conversion using the floor price and the market value of the shares using the Alternate Conversion Price, excluding any reference to the floor. The Company is currently in default and the Holder has not yet elected to alternatively convert. See further discussion in make-whole derivative liability below. See Note 16 for further discussion of the fair value determined for the derivative liability.

At September 30, 2022, the Company is in default under the terms of the Senior Convertible Note. The Senior Convertible Note matures in less than 12 months from September 30, 2022, and the Company has continued to recognize its obligation under the Senior Convertible Note as a current liability in the unaudited condensed consolidated balance sheet. The Company has not remitted payment to the Holder of the Senior Convertible Note an amount equal to 30% of the gross proceeds from the March 2022 Offering to be applied as a reduction of principal.

The Old Senior Convertible Note was issued by the Company to the Holder on June 2, 2021 in the principal amount of $35,000,000 with the Company receiving proceeds at issuance of $32,515,000, net of debt issuance costs of $2,485,000. The Old Senior Convertible Note would have matured on June 2, 2023, at which time the Company would have been required to repay the original principal balance and a minimum return ("Premium on Principal") equal to 6.0% of any outstanding principal. The aggregate principal of the Old Senior Convertible Note repayable at maturity was $37,100,000 and the Old Senior Convertible Note accrued interest at rate of 8% per annum payable in cash monthly. The Old Senior Convertible Note was issued with 2,000,000 Series A Warrants and 2,000,000 Series B Warrants. On the date of issuance, the Company recorded the fair value of the Series A Warrants and Series B Warrants as a discount to the Old Senior Convertible Note totaling $26,680,000. The debt discount was being amortized to interest expense over the term of the Old Senior Convertible Note using the effective interest method. The obligation resulting from the issuance of the Series A Warrants and Series B Warrants was determined to qualify for liability classification on the unaudited condensed consolidated balance sheet. See below for further discussion of the Series A Warrants and Series B Warrants. The Old Senior Convertible Note was convertible, at the option of the Holder, into shares of the Company's Common Stock at a conversion price of $17.50 per share. The conversion amounts were calculated as the principal balance identified for conversion plus the Premium on Principal. At any time after issuance, the Company had the option, subject to certain conditions, to redeem some or all of outstanding principal, inclusive of any minimum return due to the Holder based on the number of days the principal was outstanding.

Prior to the default, it was previously determined that the Company was not in compliance with the Old Senior Convertible Note covenants at September 30, 2021 and subsequent reporting dates. The Company therefore requested and received a waiver dated October 13, 2021 for (i) any known breaches or potential breaches of financial covenants in effect related to the available cash test and minimum cash flow test through December 25, 2021, (ii) any known breach resulting from the placement of a lien on the outstanding share capital of Prozone Limited, the entity that holds the assets of Bethard, and (iii) any known breach which would result from the Company's announcement that it would purchase an equity interest in Game Fund Partners Group LLC through the contribution of up to 200,000 shares of Common Stock. In addition, the Company requested and received an amendment to the Old Senior Convertible Note wherein the permitted ratio of outstanding debt to market capitalization was increased temporarily from 25% to 35% through December 25, 2021. In consideration for the October 13, 2021 waiver, the Company agreed to permit the conversion of up to $7,500,000 of the original principal balance of the Old Senior Convertible Note at the Alternate Conversion Price into shares of Common Stock, exclusive of the Premium on Principal and 15% premium payable that applies to an Alternate Conversion. During the year ended June 30, 2022, the Holder of the Old Senior Convertible Note had converted the full principal amount of $7,500,000 into 2,514,459 shares of Common Stock.

The Company previously obtained a waiver from the Holder of the Old Senior Convertible Note on November 2, 2021 in connection with its announcement to commence an underwritten registered public offering of its 10.0% Series A Cumulative Redeemable Convertible Preferred Stock (see Note 14). In consideration for this waiver, the Company agreed to increase the cash price payable upon a redemption of the Old Senior Convertible Note by the Company to be equal to 10% of the conversion amount, as defined in Old Senior Convertible Note agreement as any unpaid principal, minimum return due to the Holder, and unpaid interest due on such redemption date. The Company agreed to pay the Holder of the Old Senior Convertible Note an amount of $1,500,000 under the terms of a registration rights agreement. The Company recognized the amount payable to the Holder of the Old Senior Convertible Note under the registration rights agreement in other non-operating income (loss), net, in the consolidated statement of operations for the year ended June 30, 2022 and the amount remains unpaid and recorded as accounts payable and accrued expenses in the unaudited condensed consolidated balance sheet as of September 30, 2022.

During the three months ended December 31, 2021, the Company had not maintained compliance with certain covenants of the Old Senior Convertible Note, having identified non-compliance with the covenants previously identified at September 30, 2021. The Company obtained a waiver from the compliance with certain covenants, as of December 31, 2021 and through March 30, 2022.

**Make-Whole Derivative Liability**

The Senior Convertible Note agreement includes provision that should both the Company be in breach of its debt covenants and its price per common share trade below the Conversion Floor Price of $2.1832, the Holder may elect the Alternate Conversion option that includes a make-whole provision payable to the Holder in cash. At September 30, 2022, both the Company was in breach of its debt covenants and the price per share of its Common Stock had declined below the Conversion Floor Price. While the Company previously obtained waivers from the Holder of the Old Senior Convertible Note for breach of covenants, as well as a waiver for breach of covenants through March 30, 2022 under the Senior Convertible Note, the Company was unable to comply with the debt covenants under the Senior Convertible Note or otherwise obtain a debt waiver from March 31, 2022 through the three months ended September 2022 and subsequent to the period end. As a result, the make-whole provision in the Senior Convertible Note agreement was determined to represent an obligation of the Company at September 30, 2022 under the terms of the Senior Convertible Note.

The make-whole provision in the Senior Convertible Note is a derivative liability. The Company's obligation to make a payment under the make-whole provision was previously assessed as remote with an immaterial fair value. This considered that the Company had obtained debt waivers from the Holder for its breaches of debt covenants. The Company's historical stock price had also traded at levels significantly in excess of the Conversion Floor Price. At September 30, 2022, the Company has been unable to complete an agreement to restructure the terms and covenants of the Senior Convertible Note. The stock price further continues to trade materially below the Conversion Floor Price and the Company has also been unable to secure a debt waiver. The fair value of the derivative liability at September 30, 2022 was determined using a Monte Carlo valuation model. See Note 16 for further discussion of the fair value determined for the derivative liability.

At September 30, 2022, the Company estimates that it would be required to issue up to 14,758,874 shares of Common Stock under the Alternate Conversion provisions of the Senior Convertible Note. The Company further estimated the derivative liability to the holder to be $9,124,756 and $9,399,620 at September 30, 2022 and June 30, 2022, respectively, which is included in the derivative liability in the unaudited condensed consolidated balance sheets and the expense was recorded in the change in fair value of derivative liability in the unaudited condensed consolidated statements of operations. The make-whole liability calculated under the terms of the note of approximately $606,000,000 was materially higher than the fair value of $9,124,756 determined as of September 30, 2022 and considers the difference in the market price of the Company's shares and a floor price of $2.1832 multiplied by a number of shares that is based on the outstanding principal and the market price of the Company's Common Stock at September 30, 2022. The calculated make-whole liability may differ materially from the amount at which the Company may be required to pay under the Senior Convertible Note. The Company has held non-binding discussions with the Holder to restructure its obligation under the Senior Convertible Note. However, there can be no guarantee that the Company will be able to reach an agreement to restructure the Senior Convertible Note.

**Warrants**

**September 2022 Warrants**

On September 19, 2022, the Company completed the September 2022 Offering, an equity offering in which it sold 30,000,000 units at $0.25 consisting of one share of Common Stock and one warrant for a total of 30,000,000 September 2022 Warrants with an exercise price of $0.25. The Company also sold a further 3,600,000 September 2022 Warrants in an overallotment with an exercise price of $0.25 issued to the underwriters of the offering on September 19, 2022.

The September 2022 Warrants may be exercised at any time after issuance for one share of Common Stock of the Company at an exercise price of $0.25. The September 2022 Warrants also contain a beneficial ownership limitation of 4.99% which may be increased up to 9.99%, provided that any such increase will not be effective until the 61st day after delivery of a notice to the Company of such increase. The warrants are not callable by the Company.

The Company determined the September 2022 Warrants should be classified as a liability as the warrants are redeemable for cash in the event of a fundamental transaction, as defined in the Warrant Agreement, pursuant to which the September 2022 Warrants were purchased, which includes a change in control. The Company has recorded a liability for the September 2022 Warrants at fair value on the issuance date with subsequent changes in fair value reflected in earnings. On September 19, 2022, the date of the Common Stock issuance, the Company determined the total fair value of the September 2022 Warrants to be $5,286,288. On September 30, 2022, the Company determined the total fair value of the September 2022 Warrants to be $3,804,185. The change in fair value of the September 2022 Warrants liability recorded in the unaudited condensed consolidated statement of operations for the three months ended September 30, 2022 was $1,482,103. See Note 16 for additional disclosures related to the change in the fair value of the warrant liabilities.

**March 2022 Warrants**

On March 2, 2022, the Company completed the March 2022 Offering, an equity offering in which it sold 15,000,000 units at $1.00 consisting of one share of Common Stock and one warrant for a total of 15,000,000 March 2022 Warrants with an exercise price of $1.00. The Company also sold a further 2,250,000 March 2022 Warrants in an overallotment with an exercise price of $1.00 issued to the underwriters of the offering on April 1, 2022.

The March 2022 Warrants may be exercised at any time after issuance for one share of Common Stock of the Company at an exercise price of $1.00. The March 2022 Warrants are callable by the Company should the volume weighted average share price of the Company exceed $3.00 for each of 20 consecutive trading days following the date such warrants become eligible for exercise. The March 2022 Warrants also contain a beneficial ownership limitation of 4.99% which may be increased up to 9.99%, provided that any such increase will not be effective until the 61st day after delivery of a notice to the Company of such increase.

The Company determined the March 2022 Warrants should be classified as a liability as the warrants are redeemable for cash in the event of a fundamental transaction, as defined in the Common Stock Purchase Warrant Agreement pursuant to which the March 2022 Warrants were purchased, which includes a change in control. The Company has recorded a liability for the March 2022 Warrants at fair value on the issuance date with subsequent changes in fair value reflected in earnings. On March 2, 2022, the date of the Common Stock issuance, the Company determined the total fair value of the March 2022 Offering Warrants to be $9,553,500 and on the date of the Common Stock issuance, the Company determined the total fair value of the April 2022 Overallotment to be $607,500. On June 30, 2022 the Company determined the total fair value of the March 2022 Warrants to be $2,070,000. On September 30, 2022, the Company determined the total fair value of the March 2022 Warrants to be $1,207,500. The change in fair value of the March 2022 Warrants liability recorded in the unaudited condensed consolidated statement of operations for the three months ended September 30, 2022 was $862,500. See Note 16 for additional disclosures related to the change in the fair value of the warrant liabilities.

**Series A and Series B Warrants**

On June 2, 2021, the Company issued 2,000,000 Series A Warrants and 2,000,000 Series B Warrants to the holder of the Old Senior Convertible Note. The Exchange Agreement pursuant to which the Old Senior Convertible Note was exchanged for the Senior Convertible Note did not impact the Series A Warrants and Series B Warrants previously issued and outstanding. The Series A Warrants may be exercised at any time after issuance for one share of Common Stock of the Company at an exercise price of $17.50. The Series B Warrants may only be exercised to the extent that the indebtedness owing under the Senior Convertible Note is redeemed. As a result, for each share of Common Stock determined to be issuable upon a redemption of principal of the Senior Convertible Note, one Series B Warrant will vest and be eligible for exercise at an exercise price of $17.50. The Series A Warrants and Series B Warrants are callable by the Company should the volume weighted average share price of the Company exceed $32.50 for each of 30 consecutive trading days following the date such warrants become eligible for exercise. The Series A Warrants and Series B Warrants also contain a beneficial ownership limitation of 4.99% which may be increased up to 9.99%, provided that any such increase will not be effective until the 61st day after delivery of a notice to the Company of such increase.

The Company determined the Series A and Series B Warrants should be classified as a liability as the warrants are redeemable for cash in the event of a fundamental transaction, as defined in the Senior Convertible Note, which includes a change in control. The Company has recorded a liability for the Series A Warrants and Series B Warrants at fair value on the issuance date with subsequent changes in fair value reflected in earnings. At June 30, 2022 the Company determined the total fair value of the Series A Warrants and Series B Warrants to be $122,730, with a fair value of $117,340 determined for the Series A Warrants, and a fair value of $5,390 and determined for the Series B Warrants. At September 30, 2022, the Company determined the total fair value of the Series A Warrants and Series B Warrants to be $16,777 with a fair value of $16,486 determined for the Series A Warrants and a fair value of $291 determined for the Series B Warrants. The change in fair value of the Series A Warrants and Series B Warrants liability recorded in the unaudited condensed consolidated statements of operations for the three months ended September 30, 2022 and 2021 was a decrease of $105,953 and $11,808,600, respectively. See Note 16 for additional disclosures related to the change in the fair value of the warrant liabilities.

The proceeds from the issuance of the Old Senior Convertible Note were allocated to the Series A Warrants and Series B Warrants using the with-and-without method. Under this method, the Company first allocated the proceeds from the issuance of the Old Senior Convertible Note to the Series A Warrants and Series B Warrants based on their initial fair value measurement, and then allocated the remaining proceeds to the Old Senior Convertible Note. The debt discount on the Old Senior Convertible Note was being amortized over its term of two years. The Company accelerated the amortization of the debt discount on the Old Senior Convertible Note and the amount was fully recognized in the prior year ended June 30, 2022.

**Components of Long-Term Debt, including Senior Convertible Note**

The components of the Company's long-term debt, including the Senior Convertible Note follows:

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| | | |
|:---|:---|:---|
|  | **September 30, 2022** | **June 30, 2022** |
| Current portion of long-term debt, including the senior convertible note | $32314299 | $35139538 |
| Total | $32314299 | $35139538 |

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**Note 12 – Commitments and contingencies**

**Commitments**

On October 1, 2019, the Company entered into a sponsorship agreement with an eSports team (the "Team") to obtain certain sponsorship-related rights and benefits that include the ability to access commercial opportunities. The Company had agreed to initially pay the Team $516,000 in cash and $230,000 in Common Stock during the period from October 1, 2019 to June 30, 2022. On August 6, 2020, the Company entered into an amended and restated sponsorship agreement (the "Amended Sponsorship Agreement") with the Team that included cash payments totaling $2,545,000 and the issuance of Common Stock totaling $825,000 for the term of the agreement ending January 31, 2023. On December 31, 2021, the Amended Sponsorship Agreement terminated. For the three months ended September 30, 2021, the Company recorded $322,043 in sales and marketing expense related to the Team sponsorship. There were no outstanding amounts payable to the Team as of September 30, 2022 or June 30, 2022.

On August 17, 2020, the Company entered into an agreement with Bally's Corporation, an operator of various online gaming and wagering services in the state of New Jersey, USA, to assist the Company in its entrance into the sports wagering market in New Jersey under the State Gaming Law. The commencement date of the arrangement with Bally's Corporation was March 31, 2021. The Company paid $1,550,000 and issued 50,000 shares of Common Stock in connection with the commencement of the arrangement. The Bally's Corporation agreement extends for 10 years from July 1, 2021, the date of commencement, requiring the Company to pay $1,250,000 and issue 10,000 shares of Common Stock on each annual anniversary date. As of September 30, 2022, the future annual commitments by the Company under this agreement are estimated at $1,250,000 and 10,000 shares of Common Stock payable each year through the year ended June 30, 2030. During each of the three months ended September 30, 2022 and 2021, the Company recorded $342,333, in sales and marketing expense for its arrangement with Bally's Corporation. There was $342,333 in accounts payable and accrued expenses in the unaudited condensed consolidated financial statements outstanding and payable to Bally's Corporation as of September 30, 2022 and no amounts outstanding as of June 30, 2022. On October 28, 2022, the Company determined that it would close down its vie.gg New Jersey operations and exit its transactional waiver from the New Jersey Division of Gaming Enforcement.

The Company has signed a subscription and operating agreement with Game Fund Partners LLC to support the development of a planned $300,000,000 game fund. Under the agreements, the Company will initially invest approximately $2,000,000 of Company shares into 20% of the general partnership of the fund, and the Company will become part of the management and investment committee that manages an investment fund focused on joint projects and investment vehicles to fuel growth in the areas of gaming, data, blockchain, online gaming, and joint casino hotel investments. The Company has agreed to contribute 100,000 shares to the fund during the period in which the fund receives total capital commitments of $100,000,000. The Company has agreed to contribute an additional 100,000 shares to the fund during the period in which the fund reaches total capital commitments of $200,000,000. As of September 30, 2022, the Company has not contributed any shares of its Common Stock to the fund.

In the ordinary course of business, the Company enters into multi-year agreements to purchase sponsorships with professional teams as part of its marketing efforts to expand competitive esports gaming. During the three months ended September 30, 2022 and 2021, the Company recorded $237,685 and $1,222,034, respectively, in sales and marketing expense for these arrangements. As of September 30, 2022, the commitments under these agreements are estimated at $2,319,014 for the year ended June 30, 2023, $1,363,797 for the year ended June 30, 2024, $494,980 for year ended June 30, 2025, and $290,663 for the year ended June 30, 2026.

**Contingencies**

As part of the acquisition of Bethard, the Company is required to pay additional contingent cash consideration during the 24-month period following the July 13, 2021 acquisition date equal 12% of net gaming revenue for the remaining term ending July 2023. As of September 30, 2022 and June 30, 2022 the Company has estimated the contingent consideration to be $3,148,983 and $3,328,361, respectively. During the three months ended September 30, 2022, the Company recognized a gain of $179,468 in the change in fair value of contingent consideration in the unaudited condensed consolidated statement of operations.

Since the acquisition of the Argyll iGaming business on July 31, 2020, the Company has been responding to periodic requests for information from the UKGC in relation to information required to maintain its UK license following the change of corporate control. The Company continues to operate in the UK market and there have been no adverse judgments imposed by the UKGC against the Company. On November 10, 2022, the Company determined that it would be closing down its licensed remote gambling operation in the UK market. The Company will surrender its UK license as part of the winding down of the Argyll UK iGaming operations.

On January 1, 2022, amendments to the Finnish Lotteries Act came into effect, further restricting marketing opportunities and enhancing the enforcement powers of the Finnish regulator. Prior to these amendments coming into effect, in the fiscal quarter ended December 31, 2021, the Company received a communication from the Finnish regulator requesting clarification on its marketing and gaming practices related to its Finnish iGaming operations. The Company responded to the communication in Q3 of fiscal year 2022 and changed its business operations in Finland as of the fiscal quarter ended June 30, 2022 as part of its response. Further powers allowing the Finnish regulator to require blocking by payment service providers of overseas operators who are targeting their marketing activities towards Finnish customers are also expected to come into effect in the calendar year starting January 1, 2023. Subsequently, the Finnish regulator has provided a second communication requesting certain changes to the Company's marketing strategy to Finnish customers. The Company is in the process of responding to the Finnish regulator.

The Company at times may be involved in pending or threatened litigation relating to claims arising from its operations in the normal course of business. Some of these proceedings may result in fines, penalties, judgments or costs being assessed against the Company at some future time.

In determining the appropriate level of specific liabilities, if any, the Company considers a case-by-case evaluation of the underlying data and updates the Company's evaluation as further information becomes known. Specific liabilities are provided for loss contingencies to the extent the Company concludes that a loss is both probable and estimable. The Company did not have any liabilities recorded for loss contingencies as of September 30, 2022 or June 30, 2022. However, the results of litigation are inherently unpredictable, and the possibility exists that the ultimate resolution of one or more of these matters could result in a material effect on the Company's financial position, results of operations or liquidity.

Other than discussed above, the Company is currently not involved in any other litigation that it believes could have a material adverse effect on the Company's financial condition or results of operations.

**Note 13 – Revenue and Geographic Information**

The Company is a provider of iGaming, traditional sports betting and esports services that commenced revenue generating operations during the year ended June 30, 2021 with the acquisitions of Argyll, Flip Sports Limited ("FLIP"), EGL, Lucky Dino, GGC and Helix. The Company acquired Bethard in July 2021 adding to its revenue generating operations. The revenues and long-lived assets of Argyll, EGL Lucky Dino and Bethard have been identified as the international operations as they principally service customers in Europe, inclusive of the United Kingdom. The revenues and long-lived assets of FLIP, GGC and Helix (until June 10, 2022 when the Helix Game Centers were disposed) principally service customers in the United States.

A disaggregation of revenue by type of service for the three months ended September 30, 2022 and 2021 is as follows:

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| | | |
|:---|:---|:---|
|  | **Three months ended September 30,** | **Three months ended September 30,** |
|  | **2022** | **2021** |
| Online betting and casino revenues | $8595346 | $14662588 |
| Esports and other revenues | 1009918 | 1745703 |
| Total | $9605264 | $16408291 |

---

A summary of revenue by geography for the three months ended September 30, 2022 and 2021 is as follows:

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| | | |
|:---|:---|:---|
|  | **September 30, 2022** | **September 30, 2021** |
| United States | $812880 | $1520266 |
| International | 8792384 | 14888025 |
| Total | $9605264 | $16408291 |

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A summary of long-lived assets by geography as at September 30, 2022 and 2021 follows:

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| | | |
|:---|:---|:---|
|  | **September 30, 2022** | **June 30, 2022** |
| United States | $7980134 | $8271360 |
| International | 41723211 | 46620831 |
| Total | $49703345 | $54892191 |

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**Note 14 – 10% Series A Cumulative Redeemable Convertible Preferred Stock**

The Company is authorized to issue 10,000,000 shares of preferred stock. On November 10, 2021, the Company designated 1,725,000 shares of preferred stock as 10% Series A Cumulative Redeemable Convertible Preferred Stock ("10% Series A Cumulative Redeemable Convertible Preferred Stock"), with a par value of $0.001 per share and liquidation value of $11.00. On November 11, 2021, the Company announced that it priced an underwritten public offering of preferred stock as 10% Series A Cumulative Redeemable Convertible Preferred Stock in the first series issuance of preferred stock, of which 800,000 shares were issued at $10 a share on November 16, 2021 for total gross proceeds of $8,000,000, before deducting underwriting discounts and other estimated offering expenses. Net proceeds from the sale, after deducting issuance costs totaled $7,265,000.

In addition, under the terms of the underwriting agreement for the public offering of the 10% Series A Cumulative Redeemable Convertible Preferred Stock, the Company granted the underwriters a 45-day option to purchase up to an additional 120,000 shares. On December 10, 2021, there was a partial exercise to purchase 35,950 shares. Net proceeds from the additional sale, after deducting issuance costs, totaled $334,335.

**Conversion**

Each share of 10% Series A Cumulative Redeemable Convertible Preferred Stock is convertible into one share of the Company's Common Stock at a conversion price of $17.50 per common share. Subject to earlier conversion or redemption, the 10% Series A Cumulative Redeemable Convertible Preferred Stock matures five years from issuance, or November 15, 2026, at which point the Company must redeem the shares of 10% Series A Cumulative Redeemable Convertible Preferred Stock in cash.

**Dividends**

Dividends on the 10% Series A Cumulative Redeemable Convertible Preferred Stock accrue daily and are cumulative from the date of issuance. The dividends on the 10% Series A Cumulative Redeemable Convertible Preferred Stock are payable monthly in arrears on the last day of each calendar month, when, as and if declared by the Company's Board of Directors, at the rate of 10.0% per annum. In the event the dividends are not paid in cash, the dividends shall continue to accrue at a dividend rate of 10.0%.

**Redemption and Liquidation**

The 10% Series A Cumulative Redeemable Convertible Preferred Stock is also redeemable, at the option of the Board of Directors, in whole or in part, at any time on or after January 1, 2023.

The 10% Series A Cumulative Redeemable Convertible Preferred Stock includes a change of control put option which allows the holders of the 10% Series A Cumulative Redeemable Convertible Preferred Stock to require the Company to repurchase such holders' shares in cash in an amount equal to the initial purchase price plus accrued dividends.

The 10% Series A Cumulative Redeemable Convertible Preferred Stock is contingently redeemable upon certain deemed liquidation events, such as a change in control. Because a deemed liquidation event could constitute a redemption event outside of the Company's control, all shares of preferred stock have been presented outside of permanent equity in mezzanine equity on the unaudited condensed consolidated balance sheets. The instrument is initially recognized at fair value net of issuance costs. The Company reassesses whether the 10% Series A Cumulative Redeemable Convertible Preferred Stock is currently redeemable, or probable to become redeemable in the future, as of each reporting date. If the instrument meets either of these criteria, the Company will accrete the carrying value to the redemption value. The 10% Series A Cumulative Redeemable Convertible Preferred Stock has not been adjusted to its redemption amount as of September 30, 2022 because a deemed liquidation event is not considered probable.

The 10% Series A Cumulative Redeemable Convertible Preferred Stock is not mandatorily redeemable, but rather is only contingently redeemable, and given that the redemption events are not certain to occur, the shares have not been accounted for as a liability. As the 10% Series A Cumulative Redeemable Convertible Preferred Stock is contingently redeemable on events outside of the control of the Company, all shares of 10% Series A Cumulative Redeemable Convertible Preferred Stock have been presented outside of permanent equity in mezzanine equity on the unaudited condensed consolidated balance sheets.

**Voting Rights**

The holders of the 10% Series A Cumulative Redeemable Convertible Preferred Stock will not have any voting rights, except whenever dividends on any share of any series of preferred stock ("Applicable Preferred Stock") have not been paid in an aggregate amount equal to four monthly dividends on the shares, the holders of the Applicable Preferred Stock will have the exclusive and special right, voting separately as a class and without regard to series, to elect at an annual meeting of shareholders or special meeting held in place of it one member of the Board of Directors, until all arrearages in dividends and dividends in full for the current monthly period have been paid.

**Note 15 – Equity**

**Common Stock**

The authorized capital stock of the Company consists of 500,000,000 shares of Common Stock at a par value of $0.001 per share.

*Dividend Rights*

Subject to the prior or equal rights of holders of all classes of stock at the time outstanding having prior or equal rights as to dividends, the holders of the Company's Common Stock may receive dividends out of funds legally available if the Board of Directors, in its discretion, determines to issue dividends and then only at the times and in the amounts that the Board of Directors may determine. The Company has not paid any dividends on the Company's Common Stock and do not contemplate doing so in the foreseeable future.

*Voting Rights*

Each holder of the Common Stock is entitled to one vote for each share of Common Stock held by such stockholder.

*No Preemptive or Similar Rights*

The Company's Common Stock is not entitled to preemptive rights, and is not subject to conversion, redemption or sinking fund provisions.

*Liquidation*

In the event of a liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the Common Stock.

The following is a summary of common stock issuances for the three months ended September 30, 2022:

● During
 the three months ended September 30, 2022, as part of the September 2022 Offering, the Company sold 30,000,000 units at $0.25 ,
 consisting of one share of Common Stock and one warrant with an exercise price of $0.25 ,
 for gross proceeds of $7,536,000 .
 The Company recorded the issuance of these shares at a fair value of $1,568,130 comprised of $6,854,418 of cash received from the offering equal
 to the gross proceeds, net of $681,582 issuance costs, and net of the fair value
 of the September 2022 Warrant liability of $5,286,288 ,
 calculated on issuance. The proceeds from the offering were designated for general working capital and to pay to the Holder of the
 Senior Convertible Note an amount of $2,778,427 ,
 including $2,265,928 equal to 50 %
 of the gross proceeds over $2,000,000 following the payment of 7 %
 in offering fees including underwriting discounts and $512,500 equal to the Holders participation in the
 September 2022 Offering, that was applied as a reduction of principal (see Note 11).

The following is a summary of common stock issuances for the three months ended September 30, 2021:

● During
 the three months ended September 30, 2021, the Company issued 78,527 shares of Common Stock for services with
 a weighted average fair value of $7.31 per
 share or $574,299 in the aggregate.

● During
 the three months ended September 30, 2021, the Company issued 8,500 shares of Common Stock from the exercise
 of stock options with a weighted average exercise price of $4.82 or $40,969 in the aggregate.

**At-the Market Equity Offering Program**

On September 3, 2021, the Company entered "at the market" equity offering program to sell up to an aggregate of $20,000,000 of Common Stock. The shares are being issued pursuant to the Company's shelf registration statement on Form S-3 (File No. 333-252370) and the Company filed a prospectus supplement, dated September 3, 2021 with the SEC in connection with the offer and sale of the shares pursuant to the Equity Distribution Agreement with the broker. There were no shares sold under the ATM for the three months ended September 30, 2022 and 1,165,813 shares sold under the ATM during the year ended June 30, 2022 for gross proceeds of $4,005,267. The agreement between the Company and Maxim Group LLC governing the ATM expired on September 3, 2022. At this time, the Company does not plan to sign a new ATM agreement.

**Common Stock Warrants**

On September 19, 2022, the Company closed the September 2022 Offering, in which it sold 30,000,000 units at $0.25 consisting of one share of Common Stock and one September 2022 Warrant exercisable at any time after issuance for one share of Common Stock of the Company for a total of 30,000,000 September 2022 Warrants at an exercise price of $1.00. On the offering date the underwriters of the September 2022 Offering exercised the over-allotment option to purchase 3,600,000 additional September 2022 Warrants to purchase shares at a price of $0.01 per warrant. The Company received net proceeds of $36,000. There were no September 2022 Warrants exercised during the three months ended September 30, 2022 and all September 2022 Warrants were outstanding as of September 30, 2022. The September 2022 Warrants expire on September 19, 2027.

On March 2, 2022, the Company closed the March 2022 Offering, in which it sold 15,000,000 units at $1.00 consisting of one share of Common Stock and one March 2022 Warrant exercisable at any time after issuance for one share of Common Stock of the Company for a total of 15,000,000 March 2022 Warrants at an exercise price of $1.00. On April 1, 2022 the underwriters of the March 2022 Offering exercised the over-allotment option to purchase 2,250,000 additional March 2022 Warrants to purchase shares at a price of $0.01 per warrant. The Company received net proceeds of $20,925. There were no March 2022 Warrants exercised during the three months ended September 30, 2022 and all March 2022 Warrants were outstanding as of September 30, 2022. The March 2022 Warrants expire on March 2, 2027.

On June 2, 2021, the Company issued 2,000,000 Series A Warrants and 2,000,000 Series B Warrants with an exercise price of $17.50 per share to the Holder of the Senior Convertible Note. There were no Series A Warrants exercised during the three months ended September 30, 2022. At September 30, 2022, the Series B Warrants are exercisable to the extent the Company has redeemed the principal under the Senior Convertible Note. The Series A Warrants expire on June 2, 2025 and the Series B Warrants expire on June 2, 2023.

On April 16, 2020, the Company closed an offering, (the "April 2020 Offering"), in which it sold 1,980,000 units consisting of one share of Common Stock and one Unit A Warrant and one Unit B Warrant, for a total of 3,960,000 warrants, with each warrant entitling the holder to purchase one share of Common Stock priced at $4.25 per share. The Company issued an additional 209,400 Unit A Warrants and 209,400 additional Unit B Warrants to the underwriter pursuant to an over-allotment option each entitling the holder to purchase one share of Common Stock at $0.01 per share. There were 1,136,763 of Unit A Warrants outstanding on September 30, 2022. The Unit A Warrants expire on April 14, 2025. The Unit B Warrants expired one year from the date of issuance on April 19, 2021 and there were no Unit B Warrants outstanding at September 30, 2022.

In connection with the April 2020 Offering the Company also issued 1,217,241 shares of Common Stock and 2,434,482 warrants ("Conversion Warrants") to purchase one share of Common Stock at $4.25 per share upon the conversion of $4,138,585 of the Company's convertible debt and accrued interest. There were 40,582 Unit A Conversion Warrants outstanding at September 30, 2022. The Unit B Conversion Warrants have been fully exercised for shares of Common Stock.

A summary of the warrant activity follows:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Number of**<br> **Warrants** | **Weighted**<br> **Average**<br> **Exercise**<br> **Price** | **Weighted**<br> **Average**<br> **Remaining**<br> **Life (Years)** | **Intrinsic**<br> **Value** |
| Outstanding, July 1, 2021 | 5350558 | $14.19 | 3.14 | 8743588 |
| Issued | 17250000 | 1.00 |  |  |
| Exercised |  |  |  |  |
| Forfeited or cancelled | - | - |  |  |
| Outstanding, June 30, 2022 | 22600558 | $4.12 | 4.07 |  |
| Issued | 33600000 | 0.25 |  |  |
| Exercised |  |  |  |  |
| Forfeited or cancelled | - | - |  |  |
| Outstanding September 30, 2022 | 56200558 | $1.81 | 4.51 |  |

---

**Common Stock Options**

On September 10, 2020, the Company's Board of Directors adopted the 2020 Equity and Incentive Plan (the "2020 Plan") that provides for the issuance of incentive and non-qualified stock options, restricted stock, restricted stock units and stock appreciation rights to officers, employees, directors, consultants, and other key persons. Under the 2020 Plan, the maximum number of shares of Common Stock authorized for issuance was 1,500,000 shares. Each year on January 1, for a period of up to nine years, the maximum number of shares authorized for issuance under the 2020 Plan is automatically increased by 233,968 shares. At September 30, 2022, there was a maximum of 1,967,936 shares of Common Stock authorized for issuance under the 2020 Plan. There were no additional equity awards eligible for issuance from the 2017 Stock Incentive Plan that had been adopted by the Company on August 1, 2017. The outstanding stock options granted under the 2017 Stock Incentive Plan were transferred to the 2020 Plan. As of September 30, 2022, there were 986,810 shares of Common Stock available for future issuance under the 2020 Plan.

A summary of the Company's stock option activity is as follows:

Schedule of Stock Option Activity

---

| | | |
|:---|:---|:---|
|  | **Number of**<br> **Options** | **Weighted Average**<br> **Exercise Price** |
| Outstanding, June 30, 2021 | 474676 | $5.49 |
| Granted | 1120150 | 6.71 |
| Exercised | (14000) | 4.82 |
| Cancelled | (470300) | 6.54 |
| Outstanding, June 30, 2022 | 1110526 | $6.29 |
| Granted |  |  |
| Exercised |  |  |
| Cancelled | (129400) | 6.56 |
| Outstanding, September 30, 2022 | 981126 | $6.25 |

---

As of September 30, 2022, the weighted average remaining life of the options outstanding was 3.83 years. There are 981,126 options exercisable at September 30, 2022, with a weighted average exercise price of $6.25.

**Stock Based Compensation**

During the three months ended September 30, 2022 and 2021, the Company recorded stock-based compensation expense of $921,991 and $308,073, respectively, for the amortization of stock options and the issuance of Common Stock to employees and contractors for services which has been recorded as general and administrative expense in the unaudited condensed consolidated statements of operations.

As of September 30, 2022, there was no remaining unamortized stock compensation for stock options. No options were granted during the three months ended September 30, 2022.

**Note 16 – Fair Value Measurements**

The following financial instruments were measured at fair value on a recurring basis:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **September 30, 2022** | **September 30, 2022** | **September 30, 2022** | **September 30, 2022** |
|  | **Total** | **Level 1** | **Level 2** | **Level 3** |
| Contingent consideration (Note 12) | $3148893 | $- | $- | $3148893 |
| Liability for the September 2022 Warrants (Note 11) | $3804185 |  |  | $3804185 |
| Liability for the March 2022 Warrants (Note 11) | $1207500 | $1207500 | $- | $- |
| Liability for the Series A and Series B Warrants (Note 11) | $16777 | $- | $- | $16777 |
| Derivative liability on Senior Convertible Note (Note 2 and Note 11) | $9124756 | $- | $- | $9124756 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **June 30, 2022** | **June 30, 2022** | **June 30, 2022** | **June 30, 2022** |
|  | **Total** | **Level 1** | **Level 2** | **Level 3** |
| Contingent consideration (Note 12) | $3328361 | $- | $- | $3328361 |
| Liability for the March 2022 Warrants (Note 11) | $2070000 | $2070000 | $- | $- |
| Liability for the Series A and Series B Warrants (Note 11) | $122730 | $- | $- | $122730 |
| Derivative liability on Senior Convertible Note (Note 2 and Note 11) | $9399620 | $- | $- | $9399620 |

---

A summary of the changes in Level 3 financial instruments for the three months ended September 30, 2022 is as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **Warrant**<br> **Liability** | **Contingent Consideration** | **Derivative liability<br> on Senior<br> Convertible Note** |
| Balance at June 30, 2022 | $122730 | $3328361 | $9399620 |
| Fair value of the September 2022 Warrants (Note 11) | 5286288 |  |  |
| Change in fair value of September 2022 Warrants (Note 11) | (1482103) | - | - |
| Change in fair value of Series A and Series B Warrants issued with Senior Convertible Note (Note 11) | (105953) |  |  |
| Change in fair value of Bethard contingent consideration liability (Note 12) |  | (179468) |  |
| Change in the fair value of the derivative liability on Senior Convertible Note (Note 2 and Note 11) | - | - | (274864) |
| Balance at September 30, 2022 | $3820962 | 3148893 | 9124756 |

---

The September 2022 Warrants were classified as Level 3 as they are plain vanilla warrants and are not callable by the Company (Note 11). The September 2022 Warrants were valued using a Black Scholes valuation model on issuance at September 19, 2022 and for the warrants outstanding at September 30, 2022 with the following assumptions:

Schedule of Warrants Outstanding Fair Value Assumption

---

| | | |
|:---|:---|:---|
|  | **September 30, 2022** | **September 19, 2022** |
| Contractual term, in years | 5.00 | 5.00 |
| Expected volatility | 167% | 167% |
| Risk-free interest rate | 4.06% | 3.69% |
| Dividend yield |  |  |
| Conversion / exercise price | $0.25 | $0.25 |

---

The March 2022 Warrants were classified as Level 1 as they are publicly traded. They are callable by the Company if certain criteria are met (Note 11). The March 2022 Warrants outstanding at September 30, 2022 and June 30, 2022 were valued using the following assumptions:

---

| | | |
|:---|:---|:---|
|  | **September 30, 2022** | **June 30, 2022** |
| Contractual term, in years | 5.00 | 5.00 |
| Active market | Nasdaq | Nasdaq |
| Market price | $0.07 | $0.12 |

---

The Series A and Series B Warrants outstanding at September 30, 2022 and June 30, 2022 are callable by the Company if certain criteria are met (Note 11) and were valued using a Monte Carlo valuation model with the following assumptions:

---

| | | |
|:---|:---|:---|
|  | **September 30, 2022** | **June 30, 2022** |
| Contractual term, in years | 2.00 – 4.00 | 2.00 – 4.00 |
| Expected volatility | 135-190% | 125% – 133 |
| Risk-free interest rate | 3.96-4.24% | 2.75% – 2.98 |
| Dividend yield |  |  |
| Conversion / exercise price | $17.50 | $17.50 |

---

The value of the derivative liability on the Senior Convertible Note at September 30, 2022 and June 30, 2022 was valued using a nonperformance risk adjusted Monte Carlo valuation model using total assets less goodwill and an estimate of the Company's total enterprise value with the following valuation assumptions:

---

| | | |
|:---|:---|:---|
|  | **September 30, 2022** | **June 30, 2022** |
| Contractual term remaining, in years | 0.67 | 0.92 |
| Expected volatility | 177.29% | 137.11% |
| De-leveraged volatility | 64.08% | 62.88% |
| Risk-free interest rate | 3.89% | 2.72 |
| Dividend yield |  |  |
| Conversion / exercise price | $2.1832 | $2.1832 |

---

The fair value of a derivative instrument in a liability position includes measures of the Company's nonperformance risk. Significant changes in nonperformance risk used in the fair value measurement of the derivative liability may result in significant changes to the fair value measurement. The cash liability calculated under the terms of the Senior Convertible Note of approximately $606,000,000 is materially higher than the fair value of the derivative liability of $9,124,756 calculated at September 30, 2022. The calculated make-whole liability may differ materially from the amount the Company may be required to pay under the Senior Convertible Note. The Company has held non-binding discussions with the Holder to restructure its obligation under the Senior Convertible Note. However, there can be no guarantee that the Company will be able to reach an agreement to restructure the Senior Convertible Note.

The following is information relative to the Company's derivative instruments in the unaudited condensed consolidated balance sheets as of September 30, 2022 and June 30, 2022:

---

| | | | |
|:---|:---|:---|:---|
| **Derivatives Not Designated as<br> Hedging Instruments** | **Balance<br> Sheet Location** | **September 30, 2022** | **June 30, 2022** |
| Derivative liability on Senior Convertible Note (Note 2 and 11) | Derivative liability | $9124756 | $9399620 |

---

The effect of the derivative instruments on the unaudited condensed consolidated statements of operations for the three months ended September 30, 2022 and 2021 is as follows:

---

| | | | |
|:---|:---|:---|:---|
| | | **Amount of Gain (Loss) Recognized<br> in Income on Derivatives** | **Amount of Gain (Loss) Recognized<br> in Income on Derivatives** |
| | | **Three months ended September 30,** | **Three months ended September 30,** |
| <br>**Derivatives Not Designated as**<br>**Hedging Instruments** | **Location of Gain or (Loss)**<br>**Recognized in**<br>**Income on Derivatives** | **2022** | **2021** |
| Derivative liability on Senior Convertible Note (Note 2 and 11) | Change in fair value of derivative liability on Senior Convertible Note | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 274864 | $&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; - |

---

**Assets Measured on a Nonrecurring Basis**

Assets that are measured at fair value on a nonrecurring basis are remeasured when carrying value exceeds fair value. This includes the evaluation of long-lived assets, goodwill and other intangible assets for impairment. The Company's estimates of fair value required it to use significant unobservable inputs, representative of Level 3 fair value measurements, including numerous assumptions with respect to future circumstances that might directly impact each of the relevant asset groups' operations in the future and are therefore uncertain. The carrying value of the assets after any impairment approximates fair value.

The Company assesses the carrying amount of long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be recoverable. The Company assesses the fair value of goodwill using the income approach. Inputs used to calculate the fair value based on the income approach primarily include estimated future cash flows, discounted at a rate that approximates the cost of capital of a market participant.

The Company uses undiscounted future cash flows of the asset or asset group for equipment and intangible assets. During the three months ended September 30, 2022, there was no impairment of long-lived assets, goodwill and other intangible assets.

**Note 17 – Segment Information**

The Company operates its business and reports its results through two complementary operating and reportable segments: EEG iGaming and EEG Games, in accordance with ASC Topic 280, Segment Reporting.

The EEG iGaming business is comprised of our casino and sportsbook product offerings. Currently, EEG iGaming segment primarily operates in Europe. EEG iGaming includes the esports betting platform with full casino and sportsbook functionality and services for EEG iGaming customers. Our in-house gambling software platform, Phoenix, is a modern reimagined sportsbook that caters to both millennial esports bettors as well as traditional sports bettors. Phoenix is being developed through the assets and resources from our FLIP acquisition.

EEG Games' focus is on providing esports entertainment experiences to gamers through a combination of 1) our proprietary infrastructure software, GGC, which underpins our focus on esports and is a leading provider of local area network center management software and services, enabling the Company to seamlessly manage mission critical functions such as game licensing and payments, 2) online tournaments (through our EGL tournament platform), and 3) player-vs-player wagering (through our yet to be released Betground our proprietary wagering product). Currently, the EEG Games business esports operation are primarily in the United States and Europe.

Operating segments are components of the Company for which separate discrete financial information is available to and evaluated regularly by the chief operating decision maker ("CODM"), who is the Company's Chief Executive Officer, in making decisions regarding resource allocation and assessing performance. The CODM assesses a combination of metrics such as revenue and Adjusted EBITDA to evaluate the performance of each operating and reportable segment.

The Company has recast previously reported information to conform to the current management view for all prior periods presented. The changes to reportable segments had no impact to the Company's unaudited condensed consolidated financial statements.

The Company utilizes Adjusted EBITDA (as defined below) as its measure of segment profit or loss. The following table highlights the Company's revenues and Adjusted EBITDA for each reportable segment and reconciles Adjusted EBITDA on a consolidated basis to net loss. Total capital expenditures for the Company were not material to the unaudited condensed consolidated financial statements.

A measure of segment assets and liabilities has not been currently provided to the Company's CODM and therefore is not shown below. The following tables present the Company's segment information:

---

| | | |
|:---|:---|:---|
|  | **For the three months ended September 30,** | **For the three months ended September 30,** |
|  | **2022** | **2021** |
| **Revenues:** |  |  |
| EEG iGaming segment | 8595346 | 14662588 |
| EEG Games segment | 1009918 | 1745703 |
| &nbsp;&nbsp;&nbsp;**Total** | 9605264 | 16408291 |
| **Adjusted EBITDA** |  |  |
| EEG iGaming segment | (461195) | (944227) |
| EEG Games segment | (546796) | (876508) |
| Other<sup>(1)</sup> | (2214448) | (2496142) |
| &nbsp;&nbsp;&nbsp;**Total Adjusted EBITDA** | (3222439) | (4316877) |
| ***Adjusted for:*** |  |  |
| Interest expense | (1058408) | (2345196) |
| Change in fair value of derivative liability | 274864 |  |
| Change in fair value of warrant liability | 2450556 | 11808600 |
| Change in fair value of contingent consideration | 179468 |  |
| Other non-operating income (loss), net | 46450 | (1411185) |
| Depreciation and amortization | (1862718) | (3230736) |
| Right of use asset amortization | (18443) | (111616) |
| Stock-based Compensation | (921991) | (882372) |
| Cost of acquisition | (35930) | (62999) |
| &nbsp;&nbsp;&nbsp;**Net loss** | (4168591) | (552381) |

---

(1) Other comprises of corporate
 and overhead costs.

(2) The Company has no intersegment revenues or costs and thus no eliminations
 required.

(3) The Company defines Adjusted EBITDA as earnings
 (loss) before, as applicable to the particular period, interest expense; income taxes; depreciation and amortization, including right
 of use asset amortization; stock-based compensation; cost of acquisition; asset impairment charges; loss on extinguishment of senior
 convertible note; loss on conversion of senior convertible note; change in fair value of derivative liability; change in fair value
 of warrant liability; change in fair value of contingent consideration; and other non-operating income (loss), net, and certain other
 non-recurring, non-cash or non-core items (included in table above).

**Note 18 – Subsequent Events**

On October 28, 2022, the Company determined that it would close down its vie.gg New Jersey operations and exit its transactional waiver from the New Jersey Division of Gaming Enforcement.

On November 10, 2022, the Company determined that it would be closing down its licensed remote gambling operation in the UK market. The Company will surrender its UK license as part of the winding down of the Argyll UK iGaming operations.

**PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED JANUARY 13, 2023**

![A picture containing text, clipart Description automatically generated](forms-1_025.jpg)

**ESPORTS ENTERTAINMENT GROUP, INC.**

**[●] Shares of Common Stock**

**___________________________**

**Part II**

**INFORMATION NOT REQUIRED IN THE PROSPECTUS**

**Item 13. Other Expenses of Issuance and Distribution**

The estimated costs of this offering are as follows:

---

| | |
|:---|:---|
| Transfer Agent Fees | $\* |
| Accounting Fees | $\* |
| Legal Fees | $\* |
| Underwriter Fees | $\* |
| SEC Registration Fee | $1267.30 |
| FINRA Filing Fees | $\* |
| Printing Expenses | $\* |
| Total | $— |

---

All amounts are estimates, other than the SEC registration fee and the FINRA filing fee.

\* To be completed by amendment.

**Item 14. Indemnification of Directors and Officers**

Our officers and directors are indemnified as provided by the Nevada Revised Statutes and our Amended and Restated Bylaws.

Under the governing Nevada statutes, director immunity from liability to a company or its stockholders for monetary liabilities applies automatically unless it is specifically limited by a company's articles of incorporation. Our Amended and Restated Articles of Incorporation contain limiting language regarding director immunity from liability. Excepted from this immunity are:

&nbsp;&nbsp;&nbsp;&nbsp;1. a
 willful failure to deal fairly with the company or its stockholders in connection with a matter in which the director has a material
 conflict of interest;

2. a
 violation of criminal law (unless the director had reasonable cause to believe that his or his conduct was lawful or no reasonable
 cause to believe that his or his conduct was unlawful);

3. a
 transaction from which the director derived an improper personal profit; and

4. willful
 misconduct.

Our Amended and Restated Bylaws provide that we will indemnify our directors and officers to the fullest extent not prohibited by Nevada law; provided, however, that we may modify the extent of such indemnification by individual contracts with our directors and officers; and, provided, further, that we shall not be required to indemnify any director or officer in connection with any proceeding (or part thereof) initiated by such person unless:

&nbsp;&nbsp;&nbsp;&nbsp;1. such
 indemnification is expressly required to be made by law;

2. the
 proceeding was authorized by our Board;

3. such
 indemnification is provided by us, in our sole discretion, pursuant to the powers vested us under Nevada law; or

4. such
 indemnification is required to be made pursuant to the Amended and Restated Bylaws.

Our Amended and Restated Bylaws provide that we will advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or officer, of the company, or is or was serving at the request of the company as a director or executive officer of another company, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefore, all expenses incurred by any director or officer in connection with such proceeding upon receipt of an undertaking by or on behalf of such person to repay said amounts if it should be determined ultimately that such person is not entitled to be indemnified under our Amended and Restated Bylaws or otherwise.

Our Amended and Restated Bylaws provide that no advance shall be made by us to an officer of the company, except by reason of the fact that such officer is or was a director of the company in which event this paragraph shall not apply, in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made: (a) by the Board by a majority vote of a quorum consisting of directors who were not parties to the proceeding, or (b) if such quorum is not obtainable, or, even if obtainable, a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the company.

**Item 15. Recent Sales of Unregistered Securities**

We sold the following shares of unregistered common stock on the date and for the consideration shown to the identified individuals pursuant to Section 4(a)(2) of the Securities Act, which shares are restricted shares as defined in the Securities Act. The purchasers or recipients of our securities in these transactions are accredited investors, as defined in Regulation D**.**

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Date** | **Owner** | **Type** | **Number of shares** | **Consideration** |
| January [●], 2023 | Alex Igelman, Chief Executive Officer | Common Stock | 2500000 | New hire inducement grant for services |
| December 21, 2022 | Member of management | Preferred Stock (Series B) | 100 | $1000 |

---

**Item 16. Exhibits**

**INDEX TO EXHIBITS**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Exhibit<br> Number** | **Exhibit Description** | **Incorporated by Reference** | **Incorporated by Reference** | **Filed or Furnished** | **Filed or Furnished** |
| **Exhibit<br> Number** | **Exhibit Description** | **Form** | **Exhibit** | **Filing Date** | **Herewith** |
| 1.1\*\* | Form of Underwriting Agreement |  |  |  |  |
| 3.1 | [Amended and Restated Articles of Incorporation](https://www.sec.gov/Archives/edgar/data/1451448/000121390019007639/fs12019ex3-1_esportsenter.htm) | S-1 | 3.1 | 05/02/2019 |  |
| 3.2 | [Amended and Restated Bylaws](https://www.sec.gov/Archives/edgar/data/1451448/000121390019007639/fs12019ex3-2_esportsenter.htm) | S-1 | 3.2 | 05/02/2019 |  |
| 3.3 | [Certificate of Designation with respect to the 10.0% Series A Cumulative Redeemable Convertible Preferred Stock, par value $0.001 per share, dated November 10, 2021](https://www.sec.gov/Archives/edgar/data/1451448/000149315221028192/ex3-3.htm) | 8-K | 3.1 | 11/16/2021 |  |
| 3.4 | [Certificate of Designation of Series B Preferred Stock](https://www.sec.gov/Archives/edgar/data/1451448/000149315222036591/ex3-1.htm) | 8-K | 3.1 | 12/27/2022 |  |
| 4.1 | [Form of Representative Warrant](https://www.sec.gov/Archives/edgar/data/1451448/000121390020003590/fs12020a2ex4-1_esports.htm) | S-1 | 4.1 | 02/13/2020 |  |
| 4.2 | [Senior Convertible Note Exchange Agreement](https://www.sec.gov/Archives/edgar/data/1451448/000149315222005158/ex4-1.htm) | 10-Q | 4.1 | 02/22/2022 |  |
| 4.3 | [Warrant Agency Agreement by and between Esports Entertainment Group, Inc. and VStock Transfer, LLC including Form of Warrant, dated March 2, 2022](https://www.sec.gov/Archives/edgar/data/1451448/000149315222005804/ex4-1.htm) | 8-K | 4.1 | 03/02/2022 |  |
| 4.4 | [Warrant Agency Agreement by and between Esports Entertainment Group, Inc. and VStock Transfer, LLC including Form of Warrant, dated September 19, 2022](https://www.sec.gov/Archives/edgar/data/1451448/000149315222026209/ex4-1.htm) | 8-K | 4.1 | 09/19/2022 |  |
| 4.5 | [Warrant Agency Agreement by and between Esports Entertainment Group, Inc. and VStock Transfer, LLC including Form of Warrant,, dated December 21, 2022](https://www.sec.gov/Archives/edgar/data/1451448/000149315222036591/ex4-1.htm) | 8-K | 4.1 | 12/27/2022 |  |
| 4.6 | [Form of Senior Convertible Note](https://www.sec.gov/Archives/edgar/data/1451448/000149315221013304/ex4-1.htm) | 8-K | 4.1 | 06/01/2021 |  |
| 5.1\*\* | Opinion of Westward Law LLC |  |  |  |  |
| 10.1\* | [Amended and Restated Employment Agreement with Grant Johnson](https://www.sec.gov/Archives/edgar/data/1451448/000149315220018724/ex10-9.htm) | 10-K | 10.9 | 10/01/2020 |  |
| 10.2\* | [Employment Agreement with John Brackens](https://www.sec.gov/Archives/edgar/data/1451448/000121390019009464/f8k051719ex10-1_esports.htm) | 8-K | 10.1 | 05/23/2019 |  |
| 10.3\* | [Form of Director Agreement](https://www.sec.gov/Archives/edgar/data/1451448/000149315220017250/ex10-1.htm) | 8-K | 10.1 | 09/03/2020 |  |
| 10.4\* | [Form of Engagement Agreement with Daniel Marks](https://www.sec.gov/Archives/edgar/data/1451448/000149315220018724/ex10-28.htm) | 10-K | 10.27 | 10/01/2020 |  |
| 10.5 | [Stock purchase agreement, by and among Esports Entertainment Group, Inc., LHE Enterprises Limited, and AHG Entertainment, LLC](https://www.sec.gov/Archives/edgar/data/1451448/000149315220018724/ex10-29.htm) | 10-K | 10.28 | 10/01/2020 |  |
| 10.6 | [Form of Warrant issued to AHG Entertainment, LLC](https://www.sec.gov/Archives/edgar/data/1451448/000149315220018724/ex10-30.htm) | 10-K | 10.29 | 10/01/2020 |  |
| 10.7 | [Assignment of Intellectual Property Rights Agreement, by and among Esports Entertainment Group, Inc., AHG Entertainment Associates, LLC and Flip Sports Limited](https://www.sec.gov/Archives/edgar/data/1451448/000149315220018724/ex10-31.htm) | 10-K | 10.30 | 10/01/2020 |  |
| 10.8 | [Asset Purchase Agreement, dated December 14, 2020, by and among Esports Entertainment (Malta) Limited, Lucky Dino Gaming Limited, and Hiidenkivi Esonia OU](https://www.sec.gov/Archives/edgar/data/1451448/000149315220023857/ex10-1.htm) | 8-K | 10.1 | 12/17/2020 |  |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| 10.9 | [Share Purchase Agreement dated December 17, 2020, by and among Esports Entertainment Group, Inc., Phoenix Games Network Limited, and the shareholders of Phoenix Games Network Limited](https://www.sec.gov/Archives/edgar/data/1451448/000149315220024056/ex10-1.htm) | 8-K | 10.1 | 12/21/2020 |  |
| 10.10 | [Equity Purchase Agreement, dated January 22, 2021, by and between Esports Entertainment Group, Inc. and Helix Holdings, LLC](https://www.sec.gov/Archives/edgar/data/1451448/000149315221001910/ex10-1.htm) | 8-K | 10.1 | 01/27/2021 |  |
| 10.11 | [Equity Purchase Agreement, dated January 22, 2021, by and between Esports Entertainment Group, Inc. and ggCIRCUIT LLC](https://www.sec.gov/Archives/edgar/data/1451448/000149315221001910/ex10-2.htm) | 8-K | 10.2 | 01/27/2021 |  |
| 10.12 | [Form of Share Purchase Agreement dated February 11, 2021 between Esports Entertainment Group, Inc. and certain purchasers](https://www.sec.gov/Archives/edgar/data/1451448/000149315221003465/ex10-1.htm) | 8-K | 10.1 | 02/12/2021 |  |
| 10.13 | [Form of Exchange Agreement](https://www.sec.gov/Archives/edgar/data/1451448/000121390020004557/fs12020a3ex10-24_esports.htm) | S-1 | 10.24 | 02/24/2020 |  |
| 10.14 | [Form of Lock-Up Agreement](https://www.sec.gov/Archives/edgar/data/1451448/000121390020004557/fs12020a3ex10-25_esports.htm) | S-1 | 10.25 | 02/24/2020 |  |
| 10.15 | [Form of Warrant Agency Agreement including Form of Unit A Warrant](https://www.sec.gov/Archives/edgar/data/1451448/000121390020007840/fs12020a5ex10-28_esports.htm) | S-1 | 10.28 | 03/30/2020 |  |
| 10.16 | [Form of B Warrant](https://www.sec.gov/Archives/edgar/data/1451448/000121390020007840/fs12020a5ex10-29_esports.htm) | S-1 | 10.29 | 03/30/2020 |  |
| 10.17 | [Amendment No. 1 to Equity Purchase Agreement, dated May 21, 2021, by and among Esports Entertainment Group, Inc., Helix Holdings, LLC and the equity holders of Helix Holdings, LLC](https://www.sec.gov/Archives/edgar/data/1451448/000149315221012968/ex10-1.htm) | 8-K | 10.1 | 05/26/2021 |  |
| 10.18 | [Amendment No. 1 to Equity Purchase Agreement, dated May 21, 2021, by and among Esports Entertainment Group, Inc., ggCIRCUIT LLC and the equity holders of ggCIRCUIT LLC](https://www.sec.gov/Archives/edgar/data/1451448/000149315221012968/ex10-2.htm) | 8-K | 10.2 | 05/26/2021 |  |
| 10.19 | [Share Sale and Purchase Agreement, dated May 25, 2021, between the Company and Gameday Group Plc](https://www.sec.gov/Archives/edgar/data/1451448/000149315221013216/ex10-1.htm) | 8-K | 10.1 | 05/28/2021 |  |
| 10.20 | [Form of Securities Purchase Agreement.](https://www.sec.gov/Archives/edgar/data/1451448/000149315221013304/ex10-1.htm) | 8-K | 10.1 | 06/01/2021 |  |
| 10.23 | [Form of Registration Rights Agreement](https://www.sec.gov/Archives/edgar/data/1451448/000149315221013304/ex10-2.htm) | 8-K | 10.2 | 06/01/2021 |  |
| 10.24 | [Form of Warrant](https://www.sec.gov/Archives/edgar/data/1451448/000149315221013304/ex10-3.htm) | 8-K | 10.3 | 06/01/2021 |  |
| 10.25 | [Form of Subsidiary Guarantee](https://www.sec.gov/Archives/edgar/data/1451448/000149315221013304/ex10-4.htm) | 8-K | 10.4 | 06/01/2021 |  |
| 10.26 | [Indemnification Escrow Agreement, dated June 1, 2021, by and among Esports Entertainment Group, Inc., Helix Holdings, LLC, the equity holders of Helix Holdings, LLC and Lucosky Brookman LLP](https://www.sec.gov/Archives/edgar/data/1451448/000149315221013745/ex10-1.htm) | 8-K | 10.1 | 06/07/2021 |  |
| 10.27 | [Assignment of Membership Interest, dated June 1, 2021, by and between Esports Entertainment Group, Inc. and the equity holders of Helix Holdings, LLC](https://www.sec.gov/Archives/edgar/data/1451448/000149315221013745/ex10-2.htm) | 8-K | 10.2 | 06/07/2021 |  |
| 10.28 | [Form of Helix Employment Agreement](https://www.sec.gov/Archives/edgar/data/1451448/000149315221013745/ex10-3.htm) | 8-K | 10.3 | 06/07/2021 |  |
| 10.29 | [Form of Helix and GGC Non-Compete, Non-Solicitation and Non-Disclosure Agreement](https://www.sec.gov/Archives/edgar/data/1451448/000149315221013745/ex10-4.htm) | 8-K | 10.4 | 06/07/2021 |  |
| 10.30 | [Indemnification Escrow Agreement, dated June 1, 2021, by and among Esports Entertainment Group, Inc., ggCIRCUIT LLC, the equity holders of ggCIRCUIT, LLC and Lucosky Brookman LLP](https://www.sec.gov/Archives/edgar/data/1451448/000149315221013745/ex10-5.htm) | 8-K | 10.5 | 06/07/2021 |  |
| 10.31 | [Assignment of Membership Interest, dated June 1, 2021, by and between Esports Entertainment Group, Inc. and the equity holders of ggCIRCUIT LLC](https://www.sec.gov/Archives/edgar/data/1451448/000149315221013745/ex10-6.htm) | 8-K | 10.6 | 06/07/2021 |  |
| 10.32 | [October 2021 Waiver](https://www.sec.gov/Archives/edgar/data/1451448/000149315222028366/ex10-34.htm) | 10-K | 10.34 | 10/13/2022 |  |
| 10.33 | [Form of Amendment Agreement, dated July 13, 2021, between the Company and Gameday Group Plc.](https://www.sec.gov/Archives/edgar/data/1451448/000149315221016900/ex10-1.htm) | 8-K | 10.1 | 07/15/2021 |  |
| 10.34 | [Form of Pledge of Shares Agreement, dated July 13, 2021, between Esports Entertainment Group, Inc., Gameday Group Plc., and Prozone Limited.](https://www.sec.gov/Archives/edgar/data/1451448/000149315221016900/ex10-2.htm) | 8-K | 10.2 | 07/15/2021 |  |
| 10.35 | [Form of Side Letter dated July 13, 2021](https://www.sec.gov/Archives/edgar/data/1451448/000149315221016900/ex10-3.htm) | 8-K | 10.3 | 07/15/2021 |  |
| 10.36 | [Director Agreement by and between the Company and Mr. Nielsen dated October 21, 2021](https://www.sec.gov/Archives/edgar/data/1451448/000149315221026114/ex10-1.htm) | 8-K | 10.1 | 10/22/2021 |  |
| 10.37\* | [Form Director Agreement](https://www.sec.gov/Archives/edgar/data/1451448/000149315222012118/ex10-1.htm) | 8-K | 10.1 | 05/04/2022 |  |
| 10.38\* | [Form Director Agreement](https://www.sec.gov/Archives/edgar/data/1451448/000149315222012118/ex10-1.htm) | 8-K | 10.1 | 05/19/2022 |  |
| 10.39 | [Asset Purchase Agreement, dated June 10, 2022, by and between Esports Entertainment Group, Inc. and SCV CAPITAL, LLC](https://www.sec.gov/Archives/edgar/data/1451448/000149315222016960/ex10-1.htm) | 8-K | 10.1 | 06/16/2022 |  |
| 10.40 | [Assignment and Assumption Agreement, dated June 10, 2022, by and between Esports Entertainment Group, Inc. and SCV CAPITAL, LLC](https://www.sec.gov/Archives/edgar/data/1451448/000149315222016960/ex10-2.htm) | 8-K | 10.2 | 06/16/2022 |  |
| 10.41 | [Trademark License Agreement, dated June 10, 2022, by and between Esports Entertainment Group, Inc. and SCV CAPITAL, LLC](https://www.sec.gov/Archives/edgar/data/1451448/000149315222016960/ex10-3.htm) | 8-K | 10.3 | 06/16/2022 |  |
| 10.42 | [Securities Purchase Agreement, dated December 21, 2022](https://www.sec.gov/Archives/edgar/data/1451448/000149315222036591/ex10-1.htm) | 8-K | 10.1 | 12/27/2022 |  |
| 10.43 | [Subscription and Investment Representation Agreement, dated December 20, 2022](https://www.sec.gov/Archives/edgar/data/1451448/000149315222036591/ex10-2.htm) | 8-K | 10.2 | 12/27/2022 |  |
| 10.44 | [Employment Agreement with Alex Igelman](ex10-46.htm) |  |  |  | X |
| 21.1 | [Subsidiaries of Esports Entertainment Group, Inc.](https://www.sec.gov/Archives/edgar/data/1451448/000149315222028366/ex21-1.htm) | 10-K | 21.1 | 10/13/2022 |  |
| 23.1 | [Consent of Friedman LLP](ex23-1.htm) |  |  |  | X |
| 23.2\*\* | Consent of Westward Law LLC (included as part of Exhibit 5.1) |  |  |  |  |
| 23.3\*\* | Power of Attorney (included with the signature page of this Form S-1) |  |  |  |  |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| 99.1 | [Audit Committee Charter](https://www.sec.gov/Archives/edgar/data/1451448/000121390019007639/fs12019ex99-1_esportsenter.htm) | S-1 | 05/02/2019 |  |
| 99.2 | [Compensation Committee Charter](https://www.sec.gov/Archives/edgar/data/1451448/000121390019007639/fs12019ex99-2_esportsenter.htm) | S-1 | 05/02/2019 |  |
| 99.3 | [Nominating Committee Charter](https://www.sec.gov/Archives/edgar/data/1451448/000121390019007639/fs12019ex99-3_esportsenter.htm) | S-1 | 05/02/2019 |  |
| 101.INS | Inline XBRL Instance Document |  |  | X |
| 101.SCH | Inline XBRL Taxonomy Extension Schema |  |  | X |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase |  |  | X |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase |  |  | X |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase |  |  | X |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase |  |  | X |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |  |  |  |
| 107 | [Filing Fee Table](ex107.htm) |  |  | X |

---

\* Management contracts or compensation plans or arrangements in which directors or executive officers are eligible to participate. <br> \*\* To be filed by amendment.

**Item 17. Undertakings**

The undersigned registrant hereby undertakes:

1. To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) to reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement; and notwithstanding the forgoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospects filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement.; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) to include any material information with respect to the plan of distribution not previously disclosed in this registration statement or any material change to such information in the registration statement. That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered herein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

3. To remove from registration by means of a post-effective amendment any of the securities being registered hereby which remain unsold at the termination of the offering.

4. That each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to the Offering shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

5. That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§230.424 of this chapter);

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the provisions above, or otherwise, we been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, and is, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities, other than the payment by us of expenses incurred or paid by one of our directors, officers, or controlling persons in the successful defense of any action, suit or proceeding, is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification is against public policy as expressed in the Securities Act of 1933, and we will be governed by the final adjudication of such issue.

6. That each prospectus shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

7. The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§ 230.424 of the chapter);

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

**Signatures**

Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Las Vegas, State of Nevada, on the 13th day of January, 2023.

---

| | |
|:---|:---|
| **ESPORTS ENTERTAINMENT GROUP, INC.**, | **ESPORTS ENTERTAINMENT GROUP, INC.**, |
| a Nevada corporation | a Nevada corporation |
| By: | */s/ Alex Igelman* |
| Name: | Alex Igelman |
| Title: | Chief Executive Officer |

---

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Alex Igelman and Michael Villani acting singly, his or her true and lawful attorney-in-fact, with full power of substitution and resubstitution for him or her and in his or her name, place and stead, in any and all capacities to sign any and all amendments, including post-effective amendments, to this registration statement and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact or his substitute, each acting alone, may lawfully do or cause to be done by virtue thereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated.

---

| | | |
|:---|:---|:---|
| **Signature** | **Title** | **Date** |
| */s/ Alex Igelman* | Chief Executive Officer | January 13, 2023 |
| Alex Igelman | (Principal Executive Officer) |  |
| */s/ Michael Villani* | Chief Financial Officer | January 13, 2023 |
| Michael Villani | (Principal Accounting Officer and<br> Principal Financial Officer) |  |
| */s/ Jan Jones Blackhurst* | Director | January 13, 2023 |
| Jan Jones Blackhurst | (Chair of the Board of Directors) |  |
| */s/ Chul Woong Lim* | Director | January 13, 2023 |
| Chul Woong Lim |  |  |
| */s/ Alan Alden* | Director | January 13, 2023 |
| Alan Alden |  |  |
| */s/ Damian Mathews* | Director | January 13, 2023 |
| Damian Mathews |  |  |

---

## Exhibit 10.46

**Exhibit 10.46**

![](ex10-46_001.jpg)

![](ex10-46_002.jpg)

![](ex10-46_003.jpg)

![](ex10-46_004.jpg)

![](ex10-46_005.jpg)

![](ex10-46_006.jpg)

![](ex10-46_007.jpg)

![](ex10-46_008.jpg)

![](ex10-46_009.jpg)

![](ex10-46_010.jpg)

![](ex10-46_011.jpg)

![](ex10-46_012.jpg)

![](ex10-46_013.jpg)

![](ex10-46_014.jpg)

![](ex10-46_015.jpg)

![](ex10-46_016.jpg)

![](ex10-46_017.jpg)

![](ex10-46_018.jpg)

![](ex10-46_019.jpg)

![](ex10-46_020.jpg)

![](ex10-46_021.jpg)

![](ex10-46_022.jpg)

![](ex10-46_023.jpg)

![](ex10-46_024.jpg)

## Exhibit 23.1

**Exhibit 23.1**

<u>Independent Registered Public Accounting Firm's Consent</u>

We consent to the inclusion in this Registration Statement of Esports Entertainment Group, Inc. on Form S-1 of our report dated October 13, 2022, which includes an explanatory paragraph as to the Company's ability to continue as a going concern, with respect to our audits of the consolidated financial statements of Esports Entertainment Group, Inc. as of June 30, 2022 and 2021 and for the years ended June 30, 2022 and 2021, which report appears in the Prospectus, which is part of this Registration Statement. We also consent to the reference to our Firm under the heading "Experts" in such Prospectus. We were dismissed as auditors on October 25, 2022 and, accordingly, we have not performed any audit or review procedures with respect to any financial statements appearing in such Prospectus for the periods after the date of our dismissal.

 */s/ Friedman LLP*

Friedman LLP

Marlton, New Jersey

January 13, 2023

## Ex-Filing

**Exhibit 107**

Calculation of Filing Fee Tables

**FORM S-1**

(Form Type)

**ESPORTS ENTERTAINMENT GROUP, INC.**

(Exact Name of Registrant as Specified in its Charter)

<u>Table 1: Newly Registered Securities</u>

---

| | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|
|  | **Security<br> Type** | **Security<br> Class<br> Title** | **Fee<br> Calculation<br> Rule** | **Amount<br> Registered** | **Proposed<br> Maximum<br> Offering<br> Price Per<br> Share** | **Maximum<br> Aggregate<br> Offering<br> Price(1)** | **Fee<br> Rate** | **Amount of<br> Registration<br> Fee** |
| **Fees to Be Paid** | Equity | Common Stock, par value $0.0001 per share | Rule 457(o) |  |  | $11500000 | 0.00011020 | $1267.30 |
|  | **Total Offering Amounts** | **Total Offering Amounts** | **Total Offering Amounts** | **Total Offering Amounts** | **Total Offering Amounts** | $11500000 |  | $1267.30 |
|  | **Total Fees Previously Paid** | **Total Fees Previously Paid** | **Total Fees Previously Paid** | **Total Fees Previously Paid** | **Total Fees Previously Paid** |  |  | $1267.30 |
|  | **Total Fee Offsets** | **Total Fee Offsets** | **Total Fee Offsets** | **Total Fee Offsets** | **Total Fee Offsets** |  |  | $— |
|  | **Net Fee Due** | **Net Fee Due** | **Net Fee Due** | **Net Fee Due** | **Net Fee Due** |  |  | $— |

---

(1) Estimated
 solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) and includes the shares of common
 stock and/or warrants that may be issued upon exercise of a 45-day option granted to the underwriters to cover over-allotments, if
 any.