Esports Entertainment Group, Inc 10-Q for FY2024 Q2

Esports Entertainment Group, Inc. (GMBL)

10-Q 2024-03-27 For: 2023-12-31

Added on April 06, 2026

About this 10-Q

Esports Entertainment Group, Inc filed this 10-Q on March 27, 2024, covering the quarter ended December 31, 2023 (FY2024 Q2).

Headline figures

Quarter ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.58M; down 59.7% from $6.41M a year earlier
Net loss: $17.05M; compared with a net loss of $14.13M a year earlier
Diluted EPS: -$64.55; compared with -$7,873.53 a year earlier

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	GMBL	OTC Pink
Common Stock Purchase Warrants	GMBLW	OTC Pink
10.0% Series A Cumulative Redeemable Convertible Preferred Stock	GMBLP	OTC Pink
Common Stock Purchase Warrants	GMBLZ	OTC Pink

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

PART I: FINANCIAL INFORMATION	1

Item 1. Financial Statements	1

Condensed Consolidated Balance Sheets as of December 31, 2023 (unaudited) and June 30, 2023	1

Condensed Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2023 and 2022 (unaudited)	2

Condensed Consolidated Statements of Comprehensive Loss for the Three and Six Months Ended December 31, 2023 and 2022 (unaudited)	3

Condensed Consolidated Statements of Changes in Mezzanine Equity and Stockholders’ Equity (Deficit) For the Three and Six Months Ended December 31, 2023 and 2022 (unaudited)	4

Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2023 and 2022 (unaudited)	5

Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3. Quantitative and Qualitative Disclosures about Market Risk	37

Item 4. Controls and Procedures	37

PART II: OTHER INFORMATION	38

Item 1. Legal Proceedings	38

Item 1A. Risk Factors	38

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	38

Item 3. Defaults Upon Senior Securities	38

Item 4. Mine Safety Disclosures	38

Item 5. Other Information	39

Item 6. Exhibits	39

Signatures	40

	December 31, 2023			June 30, 2023
	(Unaudited)

ASSETS

Current assets
Cash	$	1,101,731		$	1,745,298
Restricted cash		2,350,231			168,304
Accounts receivable, net		72,919			93,871
Receivables reserved for users		445,988			831,942
Other receivables		293,874			497,603
Prepaid expenses and other current assets		402,390			706,030
Total current assets		4,667,133			4,043,048

Equipment, net		-			20,013
Operating lease right-of-use asset		43,305			85,517
Intangible assets, net		2,893,971			13,324,627
Goodwill		-			4,491,223
Other non-current assets		-			136,863

TOTAL ASSETS	$	7,604,409		$	22,101,291

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current liabilities
Accounts payable and accrued expenses	$	8,488,120		$	7,106,194
Liabilities to customers		270,931			664,313
Deferred revenue		1,267,682			989,027
Derivative liability		2,356,698			-
Operating lease liability – current		49,500			95,903
Total current liabilities		12,432,931			8,855,437

Warrant liability		86,250			365,726
Deferred income taxes		-			-

Total liabilities		12,519,181			9,221,163

Commitments and contingencies (Note 10)		-			-

Mezzanine equity:
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 $9,262,326 at December 31, 2023 and $9,195,450 at June 30, 2023		8,306,371			8,083,869
Series B redeemable preferred stock, $0.001 par value, 100 authorized, no shares issued and outstanding, December 31, 2023 and June 30, 2023		-			-
Series C Convertible Preferred Stock, $0.001 par value, 20,000 authorized, 1,775 shares issued and outstanding, aggregate liquidation preference $4,405,831 at December 31, 2023		3,524,665			-
Redeemable Convertible Preferred Stock		3,524,665			-

Total Mezzanine equity		11,831,036			8,083,869

Stockholders’ equity (deficit)
Preferred stock $0.001 par value; 10,000,000 shares authorized		-			-
Series C Convertible Preferred Stock, $0.001 par value, 20,000 authorized, 14,601 shares issued and outstanding, aggregate liquidation preference $18,506,798 at June 30, 2023		-			14,805,438
Series D Convertible Preferred Stock, $0.001 par value, 10,000 authorized, 3,988 shares issued and outstanding, aggregate liquidation preference $5,244,520 at December 31, 2023 and 4,300 shares issued and outstanding, aggregate liquidation preference $5,421,245 at June 30, 2023		2,495,617			2,618,389
Preferred Stock value		2,495,617			2,618,389

Common stock $0.001 par value; 1,250,000 shares authorized, 1,145,980 and 9,461 shares issued and outstanding as of December 31, 2023 and June 30, 2023, respectively		1,146			9
Additional paid-in capital		188,472,019			173,465,492
Accumulated deficit		(203,272,130	)		(181,425,905	)
Accumulated other comprehensive loss		(4,442,460	)		(4,667,164	)
Total stockholders’ equity (deficit)		(16,745,808	)		4,796,259

TOTAL LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT)	$	7,604,409		$	22,101,291

	2023			2022			2023			2022
	Three Months Ended December 31,						Six Months Ended December 31,
	2023			2022			2023			2022

Net revenue	$	2,582,027		$	6,409,405		$	5,271,844		$	16,014,669

Operating costs and expenses:
Cost of revenue		688,532			2,371,655			1,290,558			6,122,071
Sales and marketing		658,846			1,843,557			1,571,942			4,288,892
General and administrative		4,784,053			7,559,402			10,971,889			17,030,436
Asset impairment charges		12,981,142			16,135,000			12,981,142			16,135,000
Total operating expenses		19,112,573			27,909,614			26,815,531			43,576,399

Operating loss		(16,530,546	)		(21,500,209	)		(21,543,687	)		(27,561,730	)

Other income (expense):
Interest expense		-			(971,374	)		-			(2,029,782	)
Change in fair value of derivative liability		(536,698	)		8,324,802			(536,698	)		8,599,666
Change in fair value of warrant liability		74,111			2,571,732			279,476			5,022,288
Loss on contingent consideration		-			(3,044,019	)		-			(2,864,551	)
Other non-operating income (loss)		(54,940	)		486,386			(45,316	)		532,836
Total other income (expense), net		(517,527	)		7,367,527			(302,538	)		9,260,457

Loss before income taxes		(17,048,073	)		(14,132,682	)		(21,846,225	)		(18,301,273	)

Income tax benefit (expense)		-			-			-			-

Net loss	$	(17,048,073	)	$	(14,132,682	)	$	(21,846,225	)	$	(18,301,273	)

Dividend on 10% Series A cumulative redeemable convertible preferred stock		(133,752	)		(200,628	)		(334,380	)		(401,256	)
Undeclared dividend on 10% Series A cumulative redeemable convertible preferred stock		(66,876	)		-			(66,876	)		-
Accretion of 10% Series A cumulative redeemable convertible preferred stock to redemption value		(78,184	)		(75,258	)		(155,626	)		(149,802	)
Accretion of the discount on Series C convertible preferred stock		(1,820,000	)		-			(1,820,000	)		-
Dividend on Series C convertible preferred stock		(125,459	)		-			(380,982	)		-
Dividend on Series D convertible preferred stock		(87,282	)		-			(174,607	)		-
Deemed dividend on accretion of Series D Convertible Preferred Stock to redemption value		(24,741	)		-			(24,741	)		-
Deemed dividend on make whole provision on Series C Convertible Preferred Stock		(1,046,341	)		-			(4,805,990	)		-
Deemed dividend from down round provision on Series C Convertible Preferred Stock and Series D Convertible Preferred Stock		(10,979,863	)		-			(20,362,772	)		-

Net loss attributable to common stockholders	$	(31,410,571	)	$	(14,408,568	)	$	(49,972,199	)	$	(18,852,331	)

Net loss per common share:
Basic and diluted loss per common share	$	(64.55	)	$	(7,873.53	)	$	(180.08	)	$	(12,824.71	)
Weighted average number of common shares outstanding, basic and diluted		486,579			1,830			277,506			1,470

	2022			2021			2022			2021
	Three Months Ended December 31,						Six Months Ended December 31,
	2023			2022			2023			2022

Net loss	$	(17,048,073	)	$	(14,132,682	)	$	(21,846,225	)	$	(18,301,273	)

Other comprehensive loss:
Foreign currency translation gain		559,946			2,536,663			224,704			10,185

Total comprehensive loss	$	(16,488,127	)	$	(11,596,019	)	$	(21,621,521	)	$	(18,291,088	)

	Shares		Amount		Shares		Amount		Shares		Amount			Shares			Amount			Shares			Amount			Shares		Amount		capital			Deficit			loss			(Deficit)
	Mezzanine Equity													Shareholders’ Equity (Deficit)
	10% Series A Cumulative Redeemable				Series B				Series C					Series C						Series D																Accumulated			Total
	Convertible Preferred Stock				Redeemable Preferred Stock				Convertible Preferred Stock					Convertible Preferred Stock						Convertible Preferred Stock						Common Stock				Additional paid-in			Accumulated			other comprehensive			Stockholders’ Equity
	Shares		Amount		Shares		Amount		Shares		Amount			Shares			Amount			Shares			Amount			Shares		Amount		capital			Deficit			loss			(Deficit)
Balance as at July 1, 2023		835,950	$	8,083,869		-	$	-		-	$	-			14,601		$	14,805,438			4,300		$	2,618,389			9,460	$	9	$	173,465,492		$	(181,425,905	)	$	(4,667,164	)	$	4,796,259

Common stock and warrants issued in equity financing		-		-		-		-		-		-			-			-			-			-			2,500		3		193,497			-			-			193,500
Proceeds from exercise of pre funded warrants		-		-		-		-		-		-			-			-			-			-			10,420		10		806,490			-			-			806,500
Accretion of redemption value and issuance costs for 10% Series A cumulative redeemable convertible preferred stock		-		77,442		-		-		-		-			-			-			-			-			-		-		(77,442	)		-			-			(77,442	)
10% Series A cumulative redeemable convertible preferred stock cash dividend		-		-		-		-		-		-			-			-			-			-			-		-		(200,628	)		-			-			(200,628	)
Series C Convertible Preferred Stock and Series D Convertible Preferred Stock dividends		-		-		-		-		-		-			-			255,523			-			87,325			-		-		(342,848	)		-			-			-
Deemed dividend on make whole provision on Series C		-		-		-		-							-			3,759,649			-			-			-		-		(3,759,649	)		-			-			-
Deemed dividend from down round provision on Series C Convertible Preferred Stock and Series D Convertible Preferred Stock		-		-		-		-		-		-			-			-			-			-			-		-		-			-			-			-
Conversions of the Convertible preferred stock		-		-		-		-		-		-			(10,382	)		(12,406,014	)		-			-			124,792		125		12,405,889			-			-			-
Delay Payment for Series D Convertible Preferred Stock		-		-		-		-		-		-			-			-			-			-			25		-		1,935			-			-			1,935
Stock based compensation		-		-		-		-		-		-			-			-			-			-			-		-		21,078			-			-			21,078
Foreign exchange translation		-		-		-		-		-		-			-			-			-			-			-		-		-			-			(335,242	)		(335,242	)
Net loss		-		-		-		-		-		-			-			-			-			-			-		-		-			(4,798,152	)		-			(4,798,152	)
Balance as of September 30, 2023		835,950	$	8,161,311		-	$	-		-	$	-			4,219		$	6,414,596			4,300		$	2,705,714			147,197	$	147	$	182,513,814		$	(186,224,057	)	$	(5,002,406	)	$	407,808
Accretion of redemption value and issuance costs		-		78,184		-		-		-		-			-			-			-			-			-		-		(78,184	)		-			-			(78,184	)
10% Series A cumulative redeemable convertible preferred stock cash dividend		-		-		-		-		-		-			-			-			-			-			-		-		(133,752	)		-			-			(133,752	)
Undeclared dividend on 10% Series A cumulative redeemable convertible preferred stock		-		66,876		-		-		-		-			-			-			-			-			-		-		(66,876	)		-			-			(66,876	)
Series C Convertible Preferred Stock and Series D Convertible Preferred Stock dividends		-		-		-		-		-		-			-			125,459			-			87,282			-		-		(212,741	)		-			-			-
Deemed dividend on make whole provision on Series C		-		-		-		-		-		-			-			1,046,341			-			-			-		-		(1,046,341	)		-			-
Deemed dividend from down round provision on Series C Convertible Preferred Stock and Series D Convertible Preferred Stock		-		-		-		-		-		-			-			-			-			-			-		-		-			-			-			-
Conversions of the Convertible preferred stock		-		-		-		-		-		-			(2,444	)		(4,061,731	)		-			-			401,711		402		4,061,329			-			-			-
Redemption of Series D Convertible Preferred Stock and payment of dividend		-		-		-		-		-		-			-			-			(312	)		(322,120	)		-		-		-			-			-			(322,120	)
Deemed dividend on accretion of redemption value and issuance costs for Series D Convertible Preferred Stock		-		-		-		-		-		-			-			-			-			24,741			-		-		(24,741	)		-			-			-
Delay Payment for Series D Convertible Preferred Stock		-		-		-		-		-		-			-			-			-			-			627		1		10,143			-			-			10,144
Reclass of Series C Convertible Preferred Stock and Series D Convertible Preferred Stock to Mezzanine Equity		-		-		-		-		1,775		3,524,665			(1,775	)		(3,524,665	)		-			-			-		-		-			-			-			(3,524,665	)
Bifurcation of derivative		-		-		-		-		-		(1,820,000	)		-			-			-			-			-		-		-			-			-			-
Accretion of discount on Series C Convertible Preferred Stock		-		-		-		-		-		1,820,000			-			-			-			-			-		-		(1,820,000	)		-			-			(1,820,000	)
Issuance of common stock under the ATM, net of issuance costs		-		-		-		-		-		-			-			-			-			-			515,394		515		5,248,371			-			-			5,248,886
Stock based compensation		-		-		-		-		-		-			-			-			-			-			-		-		21,078			-			-			21,078
Issuance of common stock due to the reverse stock split round-up		-		-		-		-		-		-			-			-			-			-			81,051		81		(81	)		-			-			-
Foreign exchange translation		-		-		-		-		-		-			-			-			-			-			-		-		-			-			559,946			559,946
Net loss		-		-		-		-		-		-			-			-			-			-			-		-		-			(17,048,073	)		-			(17,048,073	)
Balance as of December 31, 2023		835,950	$	8,306,371		-	$	-		1,775	$	3,524,665			-		$	-			3,988		$	2,495,617			1,145,980	$	1,146	$	188,472,019		$	(203,272,130	)	$	(4,442,460	)	$	(16,745,808	)

Balance as of July 1, 2022		835,950	$	7,781,380		-	$	-		-	$	-			-		$	-			-		$	-			1,024	$	1	$	144,915,095		$	(149,140,426	)	$	(7,376,114	)	$	(11,601,444	)

Accretion of redemption value and issuance costs		-		74,544		-		-		-		-			-			-			-			-			-		-		(74,544	)		-			-			(74,544	)
10% Series A cumulative redeemable convertible preferred stock cash dividend		-		-		-		-		-		-			-			-			-			-			-		-		(200,628	)		-			-			(200,628	)
Common stock and warrants issued in equity financing, net of issuance costs		-		-		-		-		-		-			-			-			-			-			750		1		1,568,129			-			-			1,568,130
Stock based compensation		-		-		-		-		-		-			-			-			-			-			-		-		921,991			-			-			921,991
Foreign exchange translation		-		-		-		-		-		-			-			-			-			-			-		-		-			-			(2,526,478	)		(2,526,478	)
Net loss		-		-		-		-		-		-			-			-			-			-			-		-		-			(4,168,591	)		-			(4,168,591	)
Balance as at September 30, 2022		835,950	$	7,855,924		-	$	-		-	$	-			-		$	-			-		$	-			1,774	$	2	$	147,130,043		$	(153,309,017	)	$	(9,902,592	)	$	(16,081,564	)
Balance		835,950	$	7,855,924		-	$	-							-		$	-			-		$	-			1,774	$	2	$	147,130,043		$	(153,309,017	)	$	(9,902,592	)	$	(16,081,564	)
Accretion of redemption value and issuance costs		-		75,258		-		-		-		-			-			-			-			-			-		-		(75,258	)		-			-			(75,258	)
10% Series A cumulative redeemable convertible preferred stock cash dividend		-		-				-		-		-			-			-			-			-			-		-		(200,628	)		-			-			(200,628	)
Proceeds from issuance of Series B redeemable preferred stock		-		-		100		1,000		-		-			-			-			-			-			-		-		-			-			-			-
Common stock and pre-funded warrants issued in equity financing, net of issuance costs		-		-		-		-		-		-			-			-			-						177		-		2,146,685			-			-			2,146,685
Common stock issued on exercise of Pre-funded warrants		-		-		-		-		-		-			-			-			-			-			165		-		6,566			-			-			6,566
Foreign exchange translation		-		-		-				-		-			-			-			-			-			-		-		-						2,536,663			2,536,663
Net loss		-		-		-		-		-		-			-			-			-			-			-		-		-			(14,132,682	)		-			(14,132,682	)
Balance as of December 31, 2022		835,950	$	7,931,182		100	$	1,000		-	$	-			-		$	-			-		$	-			2,116	$	2	$	149,007,408		$	167,441,699		$	(7,365,929	)	$	(25,800,218	)
Balance		835,950		7,931,182		100		1,000							-			-			-			-			2,116		2		149,007,408			167,441,699			(7,365,929	)		(25,800,218	)

	2023			2022
	Six Months Ended December 31,
	2023			2022
Cash flows from operating activities:
Net loss	$	(21,846,225	)	$	(18,301,273	)
Adjustments to reconcile net loss to net cash used in operating activities:
Asset impairment charges		12,981,142			16,135,000
Amortization and depreciation		2,163,005			3,788,874
Right-of-use asset amortization		42,410			44,819
Bad debt expense		324,558			-
Stock-based compensation		42,156			921,991
Change in fair value of warrant liability		(279,476	)		(5,022,288	)
Change in fair value of contingent consideration		-			2,864,551
Change in fair value of derivative liability		536,698			(8,599,666	)
Changes in operating assets and liabilities:
Accounts receivable		20,952			(575,781	)
Receivables reserved for users		388,401			284,610
Other receivables		19,587			(577,026	)
Prepaid expenses and other current assets		333,965			251,743
Other non-current assets		-			288,658
Accounts payable and accrued expenses		1,355,659			1,844,155
Liabilities to customers		(393,574	)		(2,342,854	)
Deferred revenue		278,655			515,236
Operating lease liability		(46,403	)		(61,727	)
Net cash used in operating activities		(4,078,490	)		(8,540,978	)

Cash flows from investing activities:
Purchase of intangible assets		(62,790	)		-
Purchase of equipment		-			(3,321	)
Net cash used in investing activities		(62,790	)		(3,321	)

Cash flows from financing activities:
Proceeds from equity financing, net of issuance costs		193,500			9,001,103
Proceeds from the exercise of pre-funded warrants		806,500			6,566
Proceeds from issuance of Series B redeemable preferred stock		-			1,000
Redemption of Series D redeemable preferred stock, net of issuance costs		(322,120	)		-
Payment of dividends on 10% Series A cumulative redeemable convertible preferred stock		(334,380	)		(401,256	)
Issuance of common stock under the ATM, net of issuance costs		5,248,886			-
Repayment of senior convertible note		-			(2,778,427	)
Repayment of notes payable and finance leases		-			(36,746	)
Net cash provided by financing activities		5,592,386			5,792,240

Effect of exchange rate on changes in cash and restricted cash		87,254			(697,641	)
Net decrease in cash and restricted cash		1,538,360			(3,449,700	)
Cash and restricted cash, beginning of period		1,913,602			4,809,808
Cash and restricted cash, end of period	$	3,451,962		$	1,360,108

	December 31, 2023		December 31, 2022
Cash	$	1,101,731	$	682,378
Restricted cash		2,350,231		677,730
Cash and restricted cash	$	3,451,962	$	1,360,108

	June 30, 2023		June 30, 2022
Cash	$	1,745,298	$	2,517,146
Restricted cash		168,304		2,292,662
Cash and restricted cash	$	1,913,602	$	4,809,808

	December 31, 2023		December 31, 2022
SUPPLEMENTAL CASH FLOW INFORMATION:
CASH PAID FOR:
Interest	$	-	$	2,013,588
Income taxes	$	-	$	-

SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES:
Accretion of 10% Series A cumulative redeemable convertible preferred stock	$	155,626	$	149,802
Undeclared dividend on 10% Series A cumulative redeemable convertible preferred stock	$	66,876	$	-
Conversion of Series C Convertible Preferred Stock to common stock	$	16,467,745	$	-
Common Stock issued to settle registration rights delay fee	$	12,078	$	-
Accretion of the discount on Series C convertible preferred stock	$	1,820,000	$	-
Bifurcation of derivative	$	1,820,000	$	-
Accretion of Series D convertible preferred stock issuance costs	$	24,741	$	-
Series C Convertible Preferred Stock dividends and Series D Convertible Preferred Stock dividends	$	555,589	$	-
Deemed dividend on make whole provision on Series C and Series D Convertible Preferred Stock	$	4,805,990	$	-
Deemed dividend from down round provision on Series C Convertible Preferred Stock and Series D Convertible Preferred Stock	$	20,362,772	$	-

	(i)	approximately $1,400,000 of net proceeds from the Secured Note with the holder of the Series C Convertible Preferred Stock and the Series D Convertible Preferred Stock (the “Holder”, discussed further below);
	(ii)	the potential expected proceeds from future offerings, where the amount of the offering has not yet been determined; and
	(iii)	the ability to raise additional financing from other sources.

	December 31, 2023		December 31, 2022
Common stock options		75		20
Common stock warrants		4,938		1,406
Common stock issuable upon conversion of senior convertible note		-		369
10% Series A cumulative redeemable convertible preferred stock		842,030		835,950
Common stock issuable on conversion of Series C convertible preferred stock		991,467		-
Common stock issuable on conversion of Series D convertible preferred stock		1,178,553		-
Common stock issuable on conversion of Series D convertible preferred stock issuable from exercise of Series D preferred stock warrants issued in the Series D convertible preferred stock offering		1,209,564		-
Total		4,226,627		837,745
Anti-dilutive securities		4,226,627		837,745

	December 31, 2023		June 30, 2023
Indirect taxes	$	147,019	$	21,024
Other		146,855		476,579
Other receivables	$	293,874	$	497,603

	December 31, 2023		June 30, 2023
Prepaid marketing costs	$	14,264	$	53,365
Prepaid insurance		281,532		265,974
Prepaid gaming costs		25,934		375,082
Other		80,660		11,609
Prepaid expenses and other current assets	$	402,390	$	706,030

	December 31, 2023		June 30, 2023
Computer equipment	$	-	$	36,630
Furniture and equipment		-		35,943
Equipment, at cost				72,573
Accumulated depreciation		-		(52,560	)
Equipment, net	$	-	$	20,013

	EEG iGaming			EEG Games			Total

Goodwill, balance as of June 30, 2023	$	3,511,391		$	979,832		$	4,491,223
Foreign currency translation		44,949			-			44,949
Asset impairment charges		(3,556,340	)		(979,832	)		(4,536,172	)
Goodwill, balance as of December 31, 2023	$	-		$	-		$	-

	December 31, 2023							June 30, 2023
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Tradename	$	900,333		(171,882	)		728,451	$	2,801,963	$	(566,501	)	$	2,235,462
Developed technology and software		3,400,333		(1,428,140	)		1,972,193		9,240,018		(3,757,061	)		5,482,957
Gaming licenses		-		-			-		724,431		(724,431	)		-
Player relationships		333,334		(140,007	)		193,327		10,022,587		(4,621,655	)		5,400,932
Internal-use software		-		-			-		226,438		(21,162	)		205,276
Total	$	4,634,000		(1,740,029	)		2,893,971	$	23,015,437	$	(9,690,810	)	$	13,324,627


Remainder of Fiscal 2024	$	497,149
Fiscal 2025		994,298
Fiscal 2026		919,625
Fiscal 2027		98,218
Fiscal 2028		98,218
Thereafter		286,463
Total	$	2,893,971

	December 31, 2023		June 30, 2023
Trade accounts payable	$	4,512,575	$	4,469,927
Accrued marketing		2,012,710		1,054,085
Accrued payroll and benefits		303,035		298,636
Accrued gaming liabilities		123,243		145,393
Accrued professional fees		480,000		286,314
Accrued jackpot liabilities		-		91,892
Accrued legal settlement (Note 10)		450,000		-
Accrued other liabilities		606,557		759,947
Total	$	8,488,120	$	7,106,194

	(i)	A complaint filed on December 23, 2022 by Mr. Johnson against the Company in the United States District Court for the Southern District of New York;
	(ii)	an amended complaint filed on February 28, 2023 by Mr. Johnson against the Company; and
	(iii)	a counterclaim filed on May 24, 2023 by the Company against Mr. Johnson (together with (i) and (ii) above, the “Actions”).

	December 31, 2023		December 31, 2022
Deferred revenue, beginning of the year	$	989,027	$	575,097
Deferred revenue, end of the period	$	1,267,682	$	1,090,333
Revenue recognized in the six months ended from amounts included in deferred revenue at the beginning of the year	$	451,098	$	428,107
Deferred revenue	$	451,098	$	428,107

	December 31, 2023		June 30, 2023
United States	$	2,893,971	$	5,146,469
International		43,305		12,911,774
Total	$	2,937,276	$	18,058,243
Long-lived assets	$	2,937,276	$	18,058,243

●	During the six months ended December 31, 2023, on August 15, 2023, the Company entered into a securities purchase agreement with the Holder (the “RD SPA”). The RD SPA related to an offering of (a) 2,500 shares of our common stock, $0.001 par value per share, for a price of $77.40 per share, directly to the Holder and (b) pre-funded warrants to purchase 10,420 shares of our common stock at a price of $77.40 per warrant, directly to the Holder (the “RD Pre-funded Warrants”), with all but $0.001 per warrant prepaid to the Company at the closing of the offering. The RD Pre-funded Warrants were exercisable immediately upon issuance. The exercise price of each RD Pre-funded Warrant was $77.40 per share of common stock, of which $77.00 was prepaid. The offering closed on August 15, 2023. On August 16, 2023 all the Pre-funded Warrants were exercised. The RD SPA included the Holder waiving its rights to require the Company to cause a Subsequent Placement Optional Redemption (as defined in each of the Series C Convertible Preferred Stock Certificate of Designations (the “Series C Certificate of Designations”) and Series D Convertible Preferred Stock Certificate of Designations (the “Series D Certificate of Designations) (together the “Preferred Stock Certificates of Designations”) using the gross proceeds from the sale of the shares of common stock and warrants (including from the exercise thereof) and its rights to participate in an Eligible Subsequent Placement (as defined in each of the Preferred Stock Certificates of Designations) pursuant to Section 7(b) of the Preferred Stock Certificates of Designations, but only with respect to the offering and sale of the Securities contemplated by the RD SPA. As a result, the Company did not make any payments from the gross proceeds to the Holder. The gross proceeds from the issuance and sale of the shares of common stock were $193,500 and RD Pre-funded Warrants, were $806,500, before deducting the estimated offering expenses payable by the Company.

●	From July 1, 2023, through December 31, 2023, the Holder exchanged $16,309,814 in Series C Convertible Preferred Stock and $157,931 in accrued dividends, for 526,503 shares of our common stock at conversion prices equal to 90% of the lowest VWAP (as defined in the Senior Convertible Note) of our common stock for a trading day during the ten consecutive trading day period ending, and including, the applicable date that the conversion price was lowered for purposes of a conversion, or the floor price then in effect. The reduction in the Series C Convertible Preferred Stock was offset by the aggregate Alternate Conversion Floor Amount of $4,805,990 and additional accrued dividends of $223,050 over the same period. Under the Settlement Agreements, dated August 15, 2023 (the “August 2023 Settlement Agreement”), as described below and October 6, 2023 (the “October 2023 Settlement Agreement”), between the Company and the Holder, in the event that the conversion price then in effect, as may be adjusted under the Settlement Agreements, is greater than 90% of the lowest VWAP of the common stock during the ten consecutive trading day period ending and including the trading day of an applicable conversion notice, the accrued and unpaid dividends on the outstanding shares of preferred stock shall automatically increase, pro rata, by the applicable Alternate Conversion Floor Amount (as defined in the Preferred Stock Certificates of Designations) or, at the Company’s option, the Company shall deliver the applicable Alternate Conversion Floor Amount to the holder on the applicable date of conversion. The Company’s shares of common stock issued in connection with these conversions were not registered under the Securities Act of 1933, as amended (the “Securities Act”), and were issued to an existing Holder of the Company’s securities without commission or additional consideration in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act. As of December 31, 2023, the following these conversions, the number Series C Convertible Preferred Stock shares outstanding reduced to 1,775 from 14,601 at June 30, 2023, and $3,524,665 in aggregate amount of the Series C Convertible Preferred Stock remained outstanding.

●	During the six months ended December 31, 2023, per the August 2023 Settlement Agreement entered into with the Holder for the Company to issue common stock in partial settlement of the Registration Rights Fees payable (“RRA Fees”) under the Registration Rights Agreement (the “Series D RRA”), in connection with a delay in the filing of a registration statement for the purpose of registering the resale of the common stock issuable under the Holder’s Series D Convertible Preferred Stock and common warrants, despite the Company’s best efforts to avoid such delay, the Company agreed to initially issue 25 shares at $40.00 per share in partial settlement of RRA Fees. Further, on October 6, 2023, the Company entered into the separate October 2023 Settlement Agreement with the Holder for the Company to issue common stock in partial settlement of the RRA Fees by the Company under the Series D RRA, and replacing the August 2023 Settlement Agreement. As of December 31, 2023, the Company was obligated to pay to the Holder a Registration Delay Payment of approximately $119,500, (subject to increase with respect to any additional RRA Fees that may accrue, from time to time, under the Series D RRA and subject to decrease in accordance with the October 2023 Settlement Agreement as described below). The Company agreed to issue an additional 25 shares at $20.00 per share on October 6, 2023, (“Continued Settlement Price Per Share”) in partial settlement of RRA Fees. The Company further agreed to settle an additional $1,000 (or such other amount as the parties shall mutually agree) (“Further Settlements”) on each seven day anniversary of the October 2023 Settlement Agreement (or another date mutually agreed between the parties), until the earlier of (i) the date that the parties mutually terminate the October 2023 Settlement Agreement in writing, and (ii) such time as the remaining balance of the RRA Fees are paid in full, as applicable, to satisfy up to the remaining balance of the RRA Fees at a price per share equal to the lower of (1) 90% of the lowest VWAP per share of the common stock during the ten consecutive trading day period ending and including the trading day immediately preceding the additional share settlement, and (2) the Continued Settlement Price Per Share. As part of the settlement, the Holder also agreed to continue to waive, in part, applicable antidilution provisions within the Certificates of Designations governing the Series C Convertible Preferred Stock and Series D Convertible Preferred Stock such that the issuances of any settlement shares in accordance with the October 2023 Settlement Agreement shall not result in a Conversion Price for the applicable Conversion Amount (as such terms are defined in the Certificates of Designations governing the Series C Convertible Preferred Stock and Series D Convertible Preferred Stock) subject to such conversion less than the lesser of (A) the Conversion Price then in effect (without giving effect to any adjustments to the Conversion Price arising solely as a result of the issuances of the settlement shares under the October 2023 Settlement Agreement) and (B) the greater of (x) the Conversion Price then in effect (after giving effect to all adjustments to the Conversion Price (including, without limitation, such adjustments arising as a result of the issuances of the settlement shares under the October 2023 Settlement Agreement)) and (y) 90% of the lowest VWAP of the common stock during the ten consecutive trading day period ending and including such applicable conversion date under the terms of the Series C Convertible Preferred Stock or Series C Convertible Preferred Stock, as applicable. The October 2023 Settlement Agreement further provides that, notwithstanding anything in the applicable Preferred Stock Certificates of Designations to the contrary, with respect to any given conversion of any Series C Convertible Preferred Stock or Series D Convertible Preferred Stock, to the extent such Conversion Price, as so adjusted, is greater than 90% of the lowest VWAP of the common stock during the ten (10) consecutive trading day period ending and including the trading day of the applicable conversion notice, a Conversion Floor Price Condition (as defined in the Certificates of Designations governing the Series C Convertible Preferred Stock and Series D Convertible Preferred Stock) shall be deemed to have occurred with respect to such conversion of the Series C Convertible Preferred Stock or Series D Convertible Preferred Stock, as applicable. During the six months ended December 31, 2023, in addition to the issuances on August 17, 2023, and on October 6, 2023, as part of the Further Settlements, the Company issued 200 shares at $20.00 per share on November 3, 2023, 65 shares at $15.41 per share on November 10, 2023, 91 shares at $10.92 per share on November 17, 2023, 103 shares at $9.72 per share on November 24, 2023, 143 shares at $7.00 per share December 1, 2023 at 90% of the lowest VWAP per share of the common stock during the ten consecutive trading day period ending and including the trading day immediately preceding the additional share settlement. Due to the down round price protection provision on the Series C Convertible Preferred Stock and Series D Convertible Preferred Stock, the Company recorded a deemed dividend within stockholders’ equity associated with the reduction in conversion price in effect prior to the Further Settlements for both the Series C Convertible Preferred Stock and Series D Convertible Preferred Stock to the conversion price as defined above, of $20,362,772 based on the incremental value to the Holder due to the conversion price reduction. This incremental value is presented on the unaudited condensed consolidated statement of operations as an addition to the net loss available to common stockholders of $10,979,863 and $20,362,772 in the three and six months ending December 31, 2023, respectively. The incremental value was determined by computing the additional shares the Series C Convertible Preferred Stock and Series D Convertible Preferred Stock that would be received based on the conversion price reduction multiplied by the estimated fair value of common stock of $77.40 as of August 17, 2023, $38.60 as of October 6, 2023, $24.00 as of November 3, 2023, $17.04 as of November 10, 2023, $11.92 as of November 17, 2023, $10.88 as of November 24, 2023, $7.44 as of December 1, 2023.

	(i)	2,500 shares of our common stock, $0.001 par value per share, for a price of $77.40 per share, directly to the Holder, and
	(ii)	pre-funded warrants to purchase 10,420 shares of our Common Stock at a price of $77.40 per warrant, directly to such Holder, with all but $0.40 per warrant prepaid to the Company at the closing of the offering. The August RD Pre-funded Warrants were exercisable immediately upon issuance and were entirely exercised on August 16, 2023 at $77.40 per share of common stock, of which $77.00 was prepaid.

	(i)	4,300 shares of Series D Convertible Preferred Stock for a price of $1,000 per share,
	(ii)	Common Warrants to purchase 3,583 shares of our common stock at a price of $784.00 per share (the “Series D Common Warrants”), and
	(iii)	preferred warrants to purchase 4,300 shares of our Series D Convertible Preferred Stock at a price of $1,000 per share,

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Life (Years)		Intrinsic Value
Outstanding, June 30, 2022		565			567,600		4.07		—
Issued		4,869			400
Exercised		(446	)		400
Forfeited or cancelled		(50	)		700,000
Outstanding June 30, 2023		4,938			218,476		4.63		—
Issued		10,420			77.40
Exercised		(10,420	)		77.40
Forfeited or cancelled		-			-
Outstanding December 31, 2023		4,938			218,476		4.12		—

	Number of Options			Weighted Average Exercise Price
Outstanding, June 30, 2022		28		$	49,440
Granted		63			2,944
Exercised		-			-
Cancelled		(14	)		246,617
Outstanding, June 30, 2023		77		$	49,552
Granted		-			-
Exercised		-			-
Cancelled		(2	)		270,059
Outstanding, September 30, 2023		75		$	44,429
Granted		-			-
Exercised		-			-
Cancelled		-			-
Outstanding, December 31, 2023		75		$	44,429

	Total		Level 1		Level 2		Level 3
	December 31, 2023
	Total		Level 1		Level 2		Level 3
Liability for the March 2022 Warrants (Note 9)	$	86,250	$	86,250	$	—	$	—
Liability for the September Warrants (Note 9)	$	—	$	—	$	—	$	—
Derivative Liability (Note 9)	$	2,356,698	$	—	$	—	$	2,356,698

	Warrant Liability			Contingent Consideration			Derivative liability
Balance at June 30, 2022		122,730			3,328,361			9,399,620
Fair value of the September 2022 Warrants (Note 9)		5,286,288			—			—
Change in fair value of September 2022 Warrants (Note 9)		(5,034,412	)		—			—
Change in fair value of Series A and Series B Warrants issued with Senior Convertible Note (Note 9)		(122,730	)		—			—
Change in fair value of Bethard contingent consideration liability		—			2,864,551			—
Elimination of Bethard contingent consideration liability on sale of Bethard		—			(6,192,912	)		—
Change in the fair value of the derivative liability (Note 9)		—			—			(9,399,620	)
Balance at June 30, 2023		251,876		$	—		$	—
Change in fair value of September 2022 Warrants (Note 9)		(229,515	)		—			—
Balance at September 30, 2023	$	22,361		$	—		$	—
Change in fair value of September 2022 Warrants (Note 9)		(22,361	)		—			—
Bifurcation of the derivative liability		—			—			1,820,000
Change in the fair value of the derivative liability (Note 9)		—			—			536,698
Balance at December 31, 2023	$	—		$	—		$	2,356,698

	December 31, 2023			June 30, 2023
Contractual term, in years		-			5.00
Expected volatility		144	%		154	%
Risk-free interest rate		3.95	%		4.27	%
Dividend yield		-			-
Conversion / exercise price	$	10,000		$	10,000

	December 31, 2023 & December 5, 2023
Contractual term remaining, in years		1.00
Discount rate		25.00	%
Risk-free interest rate		4.67
Dividend rate		8.00	%
Dividend rate as of valuation date		8.50	%
Conversion / exercise price	$	7.00

	December 31, 2023		June 30, 2023
	(Unaudited)
Assets:
EEG iGaming	$	886,939	$	15,275,501
EEG Games	$	3,048,490	$	4,486,563
Other Corporate	$	3,668,980	$	2,339,227

Total	$	7,604,409	$	22,101,291
Total Assets	$	7,604,409	$	22,101,291

	●	Security of the balance by a first priority security interest in all of the Company’s tangible and intangible personal property;

	●	A maturity date of March 7, 2026;

	●	Accrued interest to the outstanding principal balance of the Secured Note at a rate of 10% per annum. All interest shall be payable quarterly in-kind by adding the amount of accrued interest to the outstanding principal balance of the Secured Note on the last Business Day of each calendar quarter;

	●	A six month standstill on certain conversions through September 7, 2024;

	●	After the standstill a limit on certain conversions to $150,000 per month;

	●	Removal of the Floor Price and Conversion Floor Price Condition, as defined in the previous filed Preferred Stock CODs;

	●	A Maturity Date of March 7, 2026, was added, at what time the Preferred Stock becomes redeemable for cash;

	●	No dividends on the outstanding balances through the new Maturity Date unless there is a triggering event as defined in the Preferred Stock CODs, as amended and restated;

	●	Amendments to the Subsequent Placement Optional Redemption, as defined in the Preferred Stock CODs, such that the first $10,000,000 raised by the Company, (including the $1,420,000 from the Secured Note), would be excluded from being used to repay down the Preferred Stock, per the terms of the Preferred Stock CODs, as amended and restated, if it is used on operating expenses in its ordinary course of business.