GMBL 8-K
Esports Entertainment Group, Inc. (GMBL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 13, 2021
ESPORTS ENTERTAINMENT GROUP, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 001-39262 | 26-3062752 | ||
(State or other jurisdiction of incorporation or organization) |
(Commission File Number) |
(IRS Employer Identification No.) |
BLOCK 6,
TRIQ PACEVILLE,
ST. JULIANS STJ 3109
MALTA
(Address of principal executive offices)
356 2713 1276
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock | GMBL | The Nasdaq Stock Market LLC | ||
| Common Stock Purchase Warrants | GMBLW | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On October 13, 2021, Esports Entertainment Group, Inc. (the “Company”) issued a press release announcing the financial and operating results of the Company for the year ended June 30, 2021. The text of the press release is furnished as Exhibit 99.1 and incorporated herein by reference.
Additionally, on October 13, 2021, the Company held an earnings phone call open to the public (the “Earnings Call”). Mr. Grant Johnson, the Company’s Chief Executive Officer along with Mr. Daniel Michael Marks, the Company’s Chief Financial Officer, discussed the financial and operating results of the Company for the year ended June 30, 2021. The script for the Earnings Call is furnished hereto as Exhibit 99.2 and incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
The information set forth in Item 2.02 of this Current Report on Form 8-K is incorporated by reference into this Item 7.01.
Cautionary Note Regarding Forward-Looking Statements
This Current Report on Form 8-K includes information that may constitute forward-looking statements. These forward-looking statements are based on the Company’s current beliefs, assumptions and expectations regarding future events, which in turn are based on information currently available to the Company. By their nature, forward-looking statements address matters that are subject to risks and uncertainties. Forward looking statements include, without limitation, statements relating to projected industry growth rates, the Company’s current growth rates and the Company’s present and future cash flow position. A variety of factors could cause actual events and results, as well as the Company’s expectations, to differ materially from those expressed in or contemplated by the forward-looking statements. Risk factors affecting the Company are discussed in detail in the Company’s filings with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, except to the extent required by applicable securities laws.
The information in Item 2.02 and Item 7.01 to this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
The Press Release and script of the Earnings Call can also be found on our website at https://esportsentertainmentgroup.com.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description of Exhibit | |
| 99.1 | Press Release dated October 13, 2021 | |
| 99.2 | Script of Earnings Call with Mr. Grant Johnson and Mr. Daniel Michael Marks, dated October 13, 2021 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ESPORTS ENTERTAINMENT GROUP, INC. | ||
| Dated: October 18, 2021 | By: | /s/ Grant Johnson |
Grant Johnson Chief Executive Officer | ||
Exhibit 99.1
Esports Entertainment Group Reports Fourth Quarter and Fiscal Year 2021 Results
Q4 revenue up 63% over Q3 to $8.8 million
$16.8 million revenue generated for fiscal year 2021
Stockholders’ equity increased to $74.8M, up from $63.4M over FY20
Company reaffirms FY22 revenue guidance of $100M to $105M
Newark, New Jersey – October 13, 2021 (GLOBE NEWSWIRE): Esports Entertainment Group, Inc. (NasdaqCM: GMBL, GMBLW) (or the “Company”) today announced financial results for its fourth quarter and fiscal year ended June 30, 2021.
Fiscal Fourth Quarter 2021 and Recent Operational Highlights
| ● | Completed acquisitions of Helix eSports and ggCircuit | |
| ● | Completed acquisition of BetHard, the B2C business of Gameday Group, adding Swedish and Spanish gaming licenses and substantially increasing revenue base | |
| ● | New Jersey gaming license formally accepted by NJ Division of Gaming Enforcement in May 2021 | |
| ● | Opened New Jersey office and expanded hiring ahead of VIE US launch | |
| ● | Completed $35 million private placement of convertible notes with $17.50 conversion price | |
| ● | Partnered with Square, the world-leading point of sale and payment processing provider, to integrate it’s payment solution into ggLeap, a premium esports center management software | |
| ● | Partnered with Game Fund Partners to become a part of their venture capital arm and a new planned $300 million game fund | |
| ● | Continued to expand partnerships with professional sports teams, becoming official tournament sponsor for the Cleveland Cavaliers, New York Rangers, Indianapolis Colts, Tampa Bay Buccaneers, LA Chargers, and LAFC | |
| ● | Partnered with Pro Football Retired Players Association, a national membership organization that develops benefits and programs for retired NFL players, to be its official esports partner and tournament provider | |
| ● | Partnered with Hall of Fame Resort and Entertainment Company to become the official esports provider for the Hall of Fame Village powered by Johnson Controls, joining Topgolf Swing Suites and Don Shula’s among others | |
| ● | Signed agreement with Associated Students of UCLA to launch state-of-the-art Helix eSports gaming facility inside Ackerman Union, located in the heart of UCLA’s campus | |
| ● | Launched crypto mining application at ggCircuit enabled LAN centers |
| ● | Launched “pay-and-play” casino brand targeting the Finnish gaming market | |
| ● | Partnered with Indian Gaming Esports Association and Spectrum Gaming to bring esports to tribal nations and casinos | |
| ● | Partnered with Liquipedia.net to create the most community-centric and responsible betting integration in esports | |
| ● | Launched InVIE esports tournament series with Dota 2 Season 1 in South America | |
| ● | Became official gambling sponsor of Beyond the Summit’s May 2021 CS:GO tournament; Beyond the Summit is one of the world’s largest esports networks | |
| ● | Partnered with Riot Games to host the Summer 2021 North American LCS Proving Grounds tournament | |
| ● | The Company’s Helix eSports subsidiary partnered with GUNNAR Optiks, the leader in blue-light gaming and computer glasses | |
| ● | Signed agreement to co-produce the 24th Annual East Coast Gaming Congress in Atlantic City | |
| ● | Signed exclusive content partnership with ESTV EsportsTV, the world’s first 24-7 live linear video channel dedicated to esports | |
| ● | Partnered with SG Esports, a Brazilian professional gaming organization, as their primary jersey sponsor | |
| ● | Partnered with Real Cricket 20, the world’s top mobile cricket game, to provide software integration services for the dafaNEWS Ecricket World Series | |
| ● | The Company’s SportNation brand nominated for eGaming’s Marketing Campaign of the Year Award | |
| ● | Partnered with Alpha Esports Tech to design computer vision technology for automated scoring |
Fiscal Fourth Quarter 2021 Financial Results
| ● | Net revenue of $8.8 million, up $8.8 million over 4Q20 and up 63% compared to 3Q21’s $5.4 million | |
| ● | Gross profit of $5.2 million, up $5.2 million over 4Q20 and up 69% compared to 3Q21’s $3.1 million | |
| ● | Gross margin as a percentage of net sales was 59%, compared to 57% in 3Q21 | |
| ● | Sales and marketing expenses of $5.1 million, up from $0.3 million in 4Q20 and compared to $2.4 million in 3Q21 | |
| ● | General and administrative expenses of $10.5 million, up from $1.8 million in 4Q20 and compared to $6.3 million in 3Q21 | |
| ● | Operating loss of $10.5 million, up from a loss of $2.1 million in 4Q20 and compared to $5.6 million in 3Q21 | |
| ● | GAAP Net loss of $4.8 million or ($2.80) per basic common share, up from a net gain of $1.9 million or $2.09 per basic common share in 4Q20 and compared to a net loss of $12.4 million or ($0.73) per share in 3Q21 | |
| ● | Non-GAAP adjusted EBITDA* of ($5.5 million), compared to adjusted EBITDA of ($0.9 million) in 4Q20 and compared to adjusted EBITDA of $2.1 million in 3Q21 |
Full Year Fiscal 2021 Financial Results
| ● | Net revenue of $16.8 million, up $16.8 million over FY20 | |
| ● | Gross profit of $8.9 million, up $8.9 million over FY20 |
| ● | Gross margin as a percentage of net sales was 53% | |
| ● | Sales and marketing expenses of $10.0 million, up $9.7 million over FY20 | |
| ● | General and administrative expenses of $24.6 million, up $3.7 million over FY20 | |
| ● | Operating loss of $25.7 million, up $21.7 million over FY20 | |
| ● | GAAP net loss of $26.4 million or $1.68 per basic common share, compared to a net loss of $10.4 million or $1.50 per share in FY20 | |
| ● | Non-GAAP adjusted EBITDA* of ($14.0 million), compared to adjusted EBITDA of ($2.3 million) in FY20 | |
| ● | Stockholders’ equity increased $63.4 million to $78.8 million at the end of FY21, up from $11.4 million at the end of FY20 |
* Reconciliation on non-GAAP financial measures provided in the tables of this press release.
Fiscal 2022 Financial Outlook
The Company expects net revenue to increase by at least 490% to $100 million to $105 million in FY22, driven primarily by the multiple acquisitions completed in calendar 2021.
Management Commentary
“The formidable foundation we built since our 2020 IPO drove strong performance in the fourth quarter and sets the stage for achieving significant growth in FY22. Based on a new record single-day performance of our iGaming division in late September, I am extremely confident in our ability to hit our guidance target,” added Grant Johnson, CEO of Esports Entertainment Group. “The partnerships we have formed, from top professional sports teams to industry-leading esports and gaming companies, clearly demonstrate the strength of our expansive product and service portfolio, and I believe our future is very bright as we continue to execute on our rapid expansion strategy driven by the solidification of our market position and the ongoing growth of our unique assets.”
Conference Call
Esports Entertainment Group will host a conference call and webcast today, Wednesday, October 13, at 5:00 p.m. ET to answer questions about the Company’s operational and financial highlights for its fourth quarter and fiscal year 2021 as well as other recent developments.
| Date: | Wednesday, October 13, 2021 |
| Time: | 5:00 p.m. Eastern Time |
| Live Call: | +1-800-437-2398 (U.S. Toll-Free) or +1-323-347-3294 (International) |
| Webcast: | http://public.viavid.com/index.php?id=146743 |
For interested individuals unable to join the conference call, a dial-in replay of the call will be available until October 27 and can be accessed by dialing +1-844-512-2921 (U.S. Toll Free) or +1-412-317-6671 (International) and entering replay pin number: 6234338.
About Esports Entertainment Group
Esports Entertainment Group is a full stack esports and online gambling company fueled by the growth of video-gaming and the ascendance of esports with new generations. Our mission is to help connect the world at large with the future of sports entertainment in unique and enriching ways that bring fans and gamers together. Esports Entertainment Group and its affiliates are well-poised to help fans and players to stay connected and involved with their favorite esports. From traditional sports partnerships with professional NFL/NHL/NBA/FIFA teams, community-focused tournaments in a wide range of esports, and boots-on-the-ground LAN cafes, EEG has influence over the full-spectrum of esports and gaming at all levels. The Company maintains offices in New Jersey, the UK and Malta. For more information visit www.esportsentertainmentgroup.com.
FORWARD-LOOKING STATEMENTS
The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The safe harbor for forward-looking statements contained in the Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they comply with the requirements of the Act.
Contact:
U.S. Investor Relations
RedChip Companies, Inc.
Dave Gentry
407-491-4498
Media Inquiries
Investor Relations Inquiries
Esports Entertainment Group, Inc.
Condensed Consolidated Balance Sheets
| June 30, 2021 | June 30, 2020 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash | $ | 19,917,196 | $ | 12,353,307 | ||||
| Restricted cash | 3,443,172 | - | ||||||
| Accounts receivable, net | 136,681 | - | ||||||
| Receivables reserved for users | 2,290,105 | - | ||||||
| Other receivables | 658,745 | - | ||||||
| Deposit on business acquisition | - | 500,000 | ||||||
| Prepaid expenses and other current assets | 3,264,344 | 263,345 | ||||||
| Total current assets | 29,710,243 | 13,116,652 | ||||||
| Equipment, net | 726,942 | 8,041 | ||||||
| Operating lease right-of-use asset | 1,272,920 | - | ||||||
| Intangible assets, net | 45,772,555 | 2,000 | ||||||
| Goodwill | 40,937,370 | - | ||||||
| Other non-current assets | 1,315,009 | 6,833 | ||||||
| TOTAL ASSETS | $ | 119,735,039 | $ | 13,133,526 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 8,458,689 | $ | 811,549 | ||||
| Liabilities to customers | 3,057,942 | - | ||||||
| Deferred revenue | 22,110 | - | ||||||
| Liabilities to be settled in stock | - | 927,855 | ||||||
| Current portion of long-term debt | 223,217 | - | ||||||
| Operating lease liability - current | 414,215 | - | ||||||
| Total current liabilities | 12,176,173 | 1,739,404 | ||||||
| Long-term debt | 6,523,804 | - | ||||||
| Warrant liability | 23,500,000 | - | ||||||
| Deferred income taxes | 1,870,861 | - | ||||||
| Operating lease liability - non-current | 878,809 | - | ||||||
| Total liabilities | 44,949,647 | 1,739,404 | ||||||
| Commitments and contingencies (Note 14) | ||||||||
| Stockholders’ equity | ||||||||
| Preferred stock $0.001 par value; 10,000,000 shares authorized, none issued and outstanding | - | - | ||||||
| Common stock $0.001 par value; 500,000,000 shares authorized, 21,896,145 and 11,233,223 shares issued and outstanding as of June 30, 2021 and June 30, 2020, respectively | 21,896 | 11,233 | ||||||
| Additional paid-in capital | 122,341,002 | 31,918,491 | ||||||
| Accumulated deficit | (46,908,336 | ) | (20,535,602 | ) | ||||
| Accumulated other comprehensive loss | (669,170 | ) | - | |||||
| Total stockholders’ equity | $ | 74,785,392 | 11,394,122 | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 119,735,039 | $ | 13,133,526 | ||||
Esports Entertainment Group, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
| Year Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Net revenue | $ | 16,783,914 | $ | - | ||||
| Operating costs and expenses: | ||||||||
| Cost of revenue | 7,861,317 | - | ||||||
| Sales and marketing | 10,038,524 | 322,517 | ||||||
| General and administrative | 24,610,511 | 3,727,198 | ||||||
| Total operating expenses | 42,510,352 | 4,049,714 | ||||||
| Operating loss | 25,726,438 | 4,049,714 | ||||||
| Other income (expense): | ||||||||
| Interest expense | (698,973 | ) | (1,995,458 | ) | ||||
| Net amortization of debt discount and premium on convertible debt | - | (1,156,877 | ) | |||||
| Change in fair value of derivative liabilities | - | (2,432,302 | ) | |||||
| Change in fair value of warrant liability | (1,549,924 | ) | - | |||||
| Change in fair value of contingent consideration | (1,748,607 | ) | - | |||||
| Loss on extinguishment of debt | - | (2,795,582 | ) | |||||
| Gain on warrant exchange | - | 1,894,418 | ||||||
| Other non-operating income (loss) | (460,328 | ) | 186,498 | |||||
| Total other expense | (4,457,832 | ) | (6,299,303 | ) | ||||
| Loss before income taxes | 30,184,270 | 10,349,017 | ||||||
| Income tax benefit (expense) | 3,811,536 | (2,398 | ) | |||||
| Net loss | $ | 26,372,734 | $ | 10,351,415 | ||||
| Basic and diluted loss per common share | $ | (1.68 | ) | $ | (1.50 | ) | ||
| Weighted average number of common shares outstanding, basic and diluted | 15,697,058 | 6,880,321 | ||||||
Esports Entertainment Group, Inc.
Condensed Consolidated Statements of Operations and Comprehensive Loss
| Quarter Ended June 30 | ||||||||
| Q4 2021 | Q4 2020 | |||||||
| Net revenue | 8,800,621 | - | ||||||
| Operating costs and expenses: | ||||||||
| Cost of revenue | 3,611,428 | - | ||||||
| Sales and marketing | 5,146,836 | 322,517 | ||||||
| General and administrative | 10,528,001 | 1,814,328 | ||||||
| Total operating expenses | 19,286,264 | 2,136,844 | ||||||
| Operating loss | 10,485,643 | 2,136,844 | ||||||
| Other income (expense): | ||||||||
| Interest expense | (699,372 | ) | 290,334 | |||||
| Net amortization of debt discount and premium on convertible debt | - | 68,328 | ||||||
| Change in fair value of derivative liabilities | - | 3,433,149 | ||||||
| Change in fair value of warrant liability | 3,180,000 | - | ||||||
| Change in fair value of contingent consideration | (442,803 | ) | - | |||||
| Loss on extinguishment of debt | - | - | ||||||
| Gain on warrant exchange | - | - | ||||||
| Other non-operating income (loss) | (194,625 | ) | 212,277 | |||||
| Total other expense | 1,843,200 | 4,004,088 | ||||||
| Loss (income) before income taxes | 8,642,443 | (1,867,244 | ) | |||||
| Income tax benefit (expense) | 3,811,536 | (2,398 | ) | |||||
| Net loss (income) | $ | 4,830,907 | $ | (1,864,846 | ) | |||
| Basic and diluted loss (income) per common share | 0.23 | (0.20 | ) | |||||
| Weighted average number of common shares outstanding, basic and diluted | 20,838,032 | 9,560,878 | ||||||
| Non GAAP Items | ||||||||
| Net income (loss) | $ | (4,830,907 | ) | $ | 1,864,846 | |||
| Increase / (decrease) to adjusted EBITDA | ||||||||
| Interest | $ | 699,372 | $ | (290,334 | ) | |||
| Income tax | $ | (3,811,536 | ) | $ | 2,398 | |||
| Depreciation and amortization | $ | 1,891,636 | $ | 2,618 | ||||
| Shared based compensation | $ | 1,074,608 | $ | 1,165,802 | ||||
| Transaction cost | $ | 2,073,641 | $ | - | ||||
| Settlement of litigation | $ | (44,497 | ) | $ | 35,771 | |||
| Other non-operating cost | $ | 194,842 | $ | (212,277 | ) | |||
| Change in fair value of warrant liability | $ | (3,180,000 | ) | $ | - | |||
| Change in fair value of contingent consideration | $ | 442,803 | $ | - | ||||
| Net amortization of debt discount and premium on convertible debt | $ | - | $ | (68,328 | ) | |||
| Change in fair value of derivative liabilities | $ | - | $ | (3,433,149 | ) | |||
| Loss on extinguishment of debt | $ | - | $ | - | ||||
| Gain on warrant exchange | $ | - | $ | - | ||||
| Adjusted EBITDA loss | $ | (5,490,038 | ) | $ | (932,653 | ) | ||
Adjusted EBITDA
The table below presents our Adjusted EBITDA reconciled to our net loss, the closest U.S. GAAP measure, for the periods indicated:
| Year Ended June 30, | ||||||||
| 2021 | 2020 | |||||||
| Net income (loss) | $ | (26,372,734 | ) | $ | (10,351,415 | ) | ||
| Adjusted for: | ||||||||
| Interest | 698,973 | 1,995,458 | ||||||
| Income tax | (3,811,536 | ) | 2,398 | |||||
| Depreciation and amortization | 3,578,797 | 20,631 | ||||||
| Shared based compensation | 4,129,726 | 1,614,236 | ||||||
| Transaction cost | 3,509,429 | - | ||||||
| Settlement of litigation | 464,409 | 114,226 | ||||||
| Other non-operating cost | 460,328 | (186,498 | ) | |||||
| Change in fair value of warrant liability | 1,549,924 | - | ||||||
| Change in fair value of contingent consideration | 1,748,607 | - | ||||||
| Net amortization of debt discount and premium on convertible debt | - | 1,156,877 | ||||||
| Change in fair value of derivative liabilities | - | 2,432,302 | ||||||
| Loss on extinguishment of debt | - | 2,795,582 | ||||||
| Gain on warrant exchange | - | (1,894,418 | ) | |||||
| Adjusted EBITDA loss | $ | (14,044,077 | ) | $ | (2,300,621 | ) | ||
Non-GAAP Financial Measures
To supplement its consolidated financial statements, which are prepared and presented in accordance with Generally Accepted Accounting Principles (GAAP), the Company uses adjusted EBITDA, a non-GAAP financial measure. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The Company uses this non-GAAP financial measure for financial and operational decision making and as a means to evaluate period-to-period comparisons. The Company believes that it provides useful information about operating results, enhances the overall understanding of past financial performance and future prospects, and allows for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP financial measure used by the Company in this press release may be different from the methods used by other companies.
We define and calculate Adjusted EBITDA as net loss before the impact of interest income or expense, income tax expense or benefit, depreciation and amortization, and further adjusted for the following items: stock-based compensation, transaction-related costs, non-core litigation, settlement and related costs, remeasurement of warrant liabilities, and certain other non-recurring, non-cash or non-core items, as described in the reconciliation below.
Adjusted EBITDA excludes certain expenses that are required in accordance with U.S. GAAP because they are non-recurring items (for example, in the case of transaction-related costs), non-cash expenditures (for example, in the case of depreciation, amortization, and stock-based compensation), or are not related to our underlying business performance (for example, in the case of interest income and expense and litigation settlement and related costs).
Exhibit 99.2
C O R P O R A T E P A R T I C I P A N T S
Grant Johnson, Chief Executive Officer, and Chairman
Daniel Marks, Chief Financial Officer
Jeff Cohen, Vice President Strategy & Investor Relations
C O N F E R E N C E C A L L P A R T I C I P A N T S
Michael Kupinski, NOBLE Capital Markets
Scott Buck, H.C. Wainwright & Co., LLC
Mike Hickey, Benchmark Company
Lisa Springer, Singular Research
P R E S E N T A T I O N
Operator
Good day, and welcome to the Esports Entertainment Group’s Fiscal 2021 Q4 Earnings Conference Call.
Today’s conference is being recorded.
Before we begin, I’m just going to read some brief Safe Harbor language. Statements we make during this call that are not statements of historical fact constitute forward-looking statements that are subject to risks, uncertainties, and other factors that could cause our actual results to different materially from historical results or from our forecast. We assume no responsibility for updating forward-looking statements. For more information, please refer to the risks and uncertainties and other factors that could cause our actual results to differ materially from our historical results and for our forecast. We assume no responsibility for updating forward-looking statements. For more information, please refer to the risks and uncertainties, and other factors discussed in our SEC filings.
Now at this time, I’d like to turn the conference over to Mr. Grant Johnson, CEO. Please go ahead, sir.
Grant Johnson
Thank you for joining us for our fiscal fourth quarter earnings call. I am very proud of how our team continues to execute and our results for both the quarter as well as the full year reflect that. In the past year, we have grown from less than 50 employees to over 250. Our revenue base has scaled alongside that, with fiscal 4Q revenue increasing 63% quarter over quarter to $8.8 mil. We’re expecting to show an even stronger rate of growth in our fiscal first quarter of 2022 as we digest some of our recent acquisitions. In addition to that strong revenue growth, we continue to make significant strides in our goal to build to the world’s best esports entertainment and online gambling company. As those of you who follow the company know, we break the business into two divisions, EEG igaming and EEG Games. I will now walk through some of the operational highlights for each division and then pass the line to Dan to go into further detail on the numbers.
ViaVid has made considerable efforts to provide an accurate transcription. There may be material errors, omissions, or inaccuracies in the reporting of the substance of the conference call. This transcript is being made available for information purposes only.
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| 1 |
Starting with iGaming, our strategy is to build a best-in-class esports betting platform with full casino and sportsbook functionality. On July 14th, we completed the acquisition of BetHard, a rapidly growing B2C traditional sports betting operator. In addition to generating over $30 mil in revenue, BetHard brings with it both Swedish and Spanish licenses.
While it is still early days, we have made significant progress integrating Lucky Dino and Bet Hard into our existing SportNation and Vie infrastructure. We expect to recognize meaningful revenue synergies as we expand our cross-sell efforts across our brands.
In addition to acquisitions, we have made significant strides growing our brands organically. In August we launched a new “pay and play” casino brand in Finland called Fiksukasino. “Pay and play” is a rapidly growing concept in the online gaming industry that allows a player to bypass onerous registration processes, enabling safe and reliable play without delay. This is a feature that many of our players and affiliates had been asking for and our team was able to deliver. Since launch, the brand has significantly exceeded our internal expectations.
Turning focus to Vie, our flagship esports betting brand. We continue to make exciting progress here. Much of our current marketing to date has been spent in Latin America, which is a the third largest esports market globally, growing more than 17% annually. So far we have signed marketing agreements with Infamous Gaming, Peru’s largest esports organization, Movistar Liga Pro Gaming League and SG esports, a Brazilian esports organization. We are particularly excited about the SG sponsorship as their DOTA 2 team will don the VIE logo as their primary jersey sponsor during The International in October, one of the most viewed esports tournaments of the year. This is in addition to the partnership we have with the Harris Blitzer men’s CSGO esports team Brand Dignitas .
Moving to our North America efforts, which we expect to be a big area of growth for Vie and for the company, I’d like to give you an update on our New Jersey license application. We are now in the final stages of what has been a long process, the pandemic was definitely a factor on the length of time it took us to get to this point as the process of document gathering was at times challenging. Our software has been submitted to the DGE Lab, which is currently in the technical audit process. Based on our successful mock audits with the testing lab, we do not anticipate any issues here. Once the testing has been completed, we are able to apply for a transactional waiver and begin making a market for esports wagering in the state. In anticipation of our imminent launch, we opened our New Jersey office in Hoboken in September and have begun scaling up staffing in the state.
With our New Jersey launch now on the horizon, we have our sights set on additional US jurisdictions. Earlier this summer, two of our executives, CFO, Dan Marks and VP strategy and IR, Jeff Cohen, were invited to testify on behalf of the industry in the Ohio State Senate Select Committee on Gaming. In September the State government of Ohio announced that they were committed to adding esports to the gambling framework as a priority and this was in large part due to these presentations. Legislation is expected to be written and voted upon this fall and we are confident that esports will be included in the state’s sports betting bill. We intend to apply and expect to receive a license in the state in 2022.
In addition to Ohio, we are in discussions with several other US states as well as the province of Ontario in Canada.
Turning now to the other division of our company, EEG Games.
In June we completed our acquisition of ggCircuit and Helix. This has been a transformative transaction for us, bringing to us an excellent team and creating a vertically integrated solution for esports entertainment.
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Because of the assets we bring to bear, we continue to attract interest from high profile organizations looking to enter the esports space. Since May we have signed exclusive agreements with the Cleveland Cavaliers, the LA Football Club, The LA Chargers, The New York Rangers, The Indianapolis Colts and the current super bowl champions, Tampa Bay Buccaneers. Additionally, we entered into a similar relationship with the Indian Gaming Esports Association, IGEA, which is the first-ever tribal esports organization to advance esports adoption among tribal nations and casinos. These groups are partnering with us specifically because they have done extensive due diligence and recognize that our combined assets are best-in-class for these non-endemics looking to enter the esports ecosystem. In addition to the 13 teams we have already signed we are in discussions with an additional 20 organizations that we expect to sign over the coming months.
I’d like to take a minute and dig into how we are monetizing all of these exciting marketing partnerships. When we initially started signing these agreements, our plan was to monetize the relationships by charging players to play in the tournaments that we are running on behalf of the teams. Other revenues would be generated from sponsorship fees for brands wishing to target the highly coveted 18-35 gamer demographic. However, in recent months we have built a new consumer facing platform that ties together all of our capabilities in the EEG Games division and adds several new revenue streams including more targeting advertising allowing smaller local brands access, ecommerce, subscriptions, play-to-earn and crypto. Additionally, we can also monetize through broadcasting our tournaments on Twitch and ESTV, which we signed a partnership with in August. This newly integrated platform will also be the primary delivery method for LANduel, our player-vs-player Skill based betting application. We will be able to provide further details on this new platform in the coming weeks as to the specific dates for the inaugural launch taking place later this fall in Atlantic city. Alongside this we will begin running the large pro team tournaments.
As we’ve communicated to investors in the past, we plan to augment these digital relationships with physical installations of our Helix Centers in the future. So far we have announced two new Center locations in North America, the first one at Hall of Fame Village in Canton Ohio and the second in Los Angeles at UCLA in their student union. We expect UCLA to open prior to the end of this year with Hall of Fame coming online in 1st quarter 2022. Our plan is to open approximately one center a quarter for the next two years and are in discussions with several of the organizations referenced above about potential locations.
Lastly, I’d like to touch on ggCircuit, which is the infrastructure software that underpins our EEG Games division. To remind our investors, ggCircuit is a B2B operating system for LAN Center management. The company currently has over 650 centers and 15,000 screens on their network up from 517 and 11,500 at the beginning of 2021. The development team has continued to improve the product offering for our customers. In May we announced the roll-out of a crypto mining solution that is a free add-on for ggLeap subscribers. The crypto miner enables center owners to utilize idle computing power to mine for crypto, mainly Ethereum to date, by opting into the initiative with the click of a button. Since launch, this initiative has substantially outperformed our expectations with over 300 centers across 58 countries opting in and mining over $1m in Ethereum.
In addition to our crypto mining operations, we also allow players to deposit and withdraw crypto for wagering on our Vie.bet platform and we will add to our other igaming operations once approved by the various commissions.
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Regarding an Update on financing, I would like to address some of the misinformation that has been promoted in stock chat groups regarding our financing and the various tools at our disposal. As we disclosed back in the 3rd Q we put a shelf in place for $100M and in fact back in February used $30M of this vehicle to finance the purchase of Lucky Dino which added $30M in revenues and approx. $5M in positive cash flow. This September we linked an ATM to the shelf this did not replace or add to the shelf in place it simply gave us an ability to draw down on the shelf in small amounts at a substantial cost saving . This has been misrepresented by certain groups who have an agenda to negatively effect the share price. we believe, as do all 5 of the analysts who cover us, that the share price is well below where it should be based on comparable companies in the market. As the largest single shareholder my interests are in direct alignment with all shareholders. To that end we have been exploring many alternatives. One such alternative is our new partnership with Game Fund, this is a new $300M fund that is dedicated to financing esports gaming and gambling operations. By being a partner we receive several benefits, clearly having a relationship with a large friendly source of capital is important as well as receiving strategic introductions for partnerships and potential M&A targets..
We continue to explore and negotiate other forms of capital such as metaverse partners which we will be able to discuss in detail shortly.
I will now hand the discussion over to our CFO, Dan Marks, to go through the numbers for you.
Dan Marks – Esports Entertainment Group, Inc – CFO
Thank you, Grant and Good afternoon, everyone, and thanks again for joining us today.
This time last year, our Q4 fiscal 2020 earnings call marked a significant milestone for the company as it was the 1st post our NASDAQ listing. Fast forward 12 months, and we have completed six material acquisitions and 2 rounds of capital raising, in what has been a monumental year for the company, but it leaves us very well positioned in our ambition to be the Global Leader in Esports Entertainment, Betting and Digital Gaming.
Before I jump into the financials, let me take a brief moment to summarize the key highlights that will frame our 2021 full year results. First, we moved at an unrelenting pace to execute against our core growth strategy to acquire and consolidate three B2C digital gaming businesses (Argyll Entertainment, Lucky Dino and Bethard), who operate in eight countries in Europe and beyond.
Furthermore, we have acquired and consolidated both retail and online B2C esports competition businesses, through our Esports Gaming League and Helix acquisitions and, via the purchase of ggCircuit, we have acquired and expanded the nation’s largest esports competition B2B software business.
In support of our growth strategy, the NASDAQ listing and follow-on offerings allowed us to deploy capital to expand resources, strengthen the corporate enterprise and to continue to develop our state-of-the-art betting platform, Vie.gg, melding esports with digital gaming.
Finally, we have established affiliate partnerships with 13 pro sports teams in the US, to lever their databases into online and land-based esports competitions, and furthermore we’ll use our acquisition of Genji Analytics, an esports data analytics company, to hone data from EEG’s multiple B2B and B2C operations for monetization purposes and to improve risk management in setting esports betting lines.
To reiterate Grant’s messaging, 2021 was a truly foundational year for EEG. And while the investments required to position us for continued expansion increased our Net Losses, a significant proportion of these expenses are now behind us.
On our path to achieving scale and diversification, there are aspects to our revenues and EBITDA that will make comparatives challenging due to the sheer number of acquisitions and material growth across the year. The company was effectively pre-Revenue during fiscal 2020, and as such comparative, relative, growth rates against last year are difficult.
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That being said I will move on to a review of our Q4 quarterly performance, our full year 2021 performance and provide some guidance to Q1 fiscal 2022.
Overall, from a financial statement standpoint, fourth quarter 2021 highlights include 8.8 million dollars of net revenue in the quarter, a 3.4 million dollar, or 63%, increase on net revenues versus the prior quarter. This increase was driven by incorporating a full quarter of revenues from the Lucky Dino acquisition, which completed on 1st March, together with one month of revenues from the acquisitions of ggCircuit and Helix, which completed on 1st June.
The quarter-on-quarter growth in net revenues however was slightly dampened by a reduction in gross gaming margins across our iGaming business. Whilst handle on our Argyll Sportsbook and Casino brands increased in Q4 by 20% to $68 million dollars, gross gaming margins reduced to 4.4% from 6.7% in the prior quarter, as a result of some material wins within some of our high net value players. Within our Lucky Dino casino brands, average monthly handle during the quarter rose 1 percentage point to $45 million dollars, but gross margins across the quarter reduced to 6.5%, down from 6.8% in March. However, average deposits per customer on our Casino brands increased by 5% in the quarter to $312 per active player, and leaves us well positioned looking forward.
Despite the headwinds caused by lower gross-gaming margins within the iGaming division in the quarter, Gross margins across the entire business, incorporating total Net Revenues less total Costs of Revenues, increased to 59% from 57% in the previous quarter.
From an operating expense standpoint, we saw quarter on quarter increases in sales and marketing of $2.4m, and G&A expenses of $6.2m. These increases were primarily driven by having a full quarter’s worth of Lucky Dino and 1 month worth of ggCircuit / Helix expenses in Q4 (versus just 1 month of Lucky Dino expenses in Q3). But the increase in G&A costs was also driven by some one-off transaction costs totaling $2.1m, namely those related to the closing of ggCircuit and Helix, and costs associated with the Bethard acquisition (that closed in early July), together with an increase of $1m in depreciation and amortization over the prior quarter
On the Other expense lines, we benefited from an improvement in the fair value of our warrant liabilities to the tune of $3.2 million dollars, and an income tax benefit, through the release of deferred tax liabilities, of $3.8m.
On a GAAP basis therefore, net loss for the quarter was $4.8m compared to a net loss of $12.4m in the previous quarter. On a non-GAAP basis, adjusting for non-cash charges, tax benefits and one-off transactional costs, adjusted ebitda was negative $5.5m dollars for the quarter.
Next, let me briefly review our full year 2021 results. From being pre-revenue in 2020, we generated $16.8 million dollars of revenue in full year fiscal 2021. This was predominantly driven by 11 months of revenues from Argyll Entertainment, and 4 months of revenues from Lucky Dino.
In terms of total Operating expenses, the costs associated with 6 acquisitions and 2 funding rounds during the year, meant we incurred an elevated level of professional advisory services and other related costs, as we executed against our public listing and M&A strategies. We also invested, and will continue to invest, in operational excellence through the continued expansion of our internal resources as well as the building out of our betting and tournament platforms. Sequentially, and post an additional $3m of stock compensation charges and $3.1m in depreciation and amortization charges, total Operating Losses for the year were $25.7 million dollars.
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Total Net Loss for the year on a GAAP basis, having accounted for changes in the fair value of both warrant liabilities and contingent consideration, offset by the previously mentioned release of deferred tax liabilities, was $26.4 million dollars or -$1.68 per weighted average diluted share, compared to a net loss of $10.4 million in 2020 or -$1.50 per weighted average diluted share.
The weighted average diluted share count for the full year 2021 was 15.7 million compared to 6.9 million in 2020.
On a non-GAAP basis, our adjusted EBITDA for 2021 was -$14 million dollars, compared to -$2.3 million dollars in 2020.
From a balance sheet perspective, as of June 30th, we had $19.9 million in cash, driven by the private placement of $35 million dollars of Convertible Notes in May, which were part used to fund the ggCircuit and Helix acquisitions. We had approximately $17.5 million in working capital, and total shareholders’ equity of $74.8 million dollars, up $63.4 million dollars from our position at the end of fiscal 2020. Our current net cash burn is approximately $1m per month post the acquisitions of ggCircuit and Helix, together with the monthly interest payments owed on the $35million dollar notes.
It remains a critical time to innovate and advance our platforms, and we will continue to invest in proprietary software development, both with developing our betting platform and our tournament platforms, as we look to monetize the opportunities that present themselves with the pro-Sports team partnerships we have announced.
In summary therefore, in Q4 and throughout fiscal year 2021, we have continued to show material quarter-on-quarter growth, as both our organic and acquisitive growth strategies have been executed. We will look to build on these foundations, and start to realize the cross-sell benefits and efficiencies that bringing together the various acquisitions we have undertaken, will present.
Looking forward to fiscal 2022 guidance, we are excited about the growth and momentum of our iGaming business. The acquisition of Bethard in July, brings new material revenue and ebitda streams, together with two new gaming licenses, and increased cross-sell opportunities between our brands. Consolidating our digital gaming businesses will allow us to exploit both revenue and expense synergies. Launching our betting platform in New Jersey in the coming weeks, together with exploring license options in other states, offers further growth opportunities for the iGaming division.
On our EEG Games side, the brand partnerships we have announced, together with the enhancements of our tournament platforms, will allow for access to new customers, both online and in live, in-person events at our Helix centers, which will drive monetization opportunities. The growth in our ggCircuit B2B Software business will continue, augmented by ever-growing Crypto currency mining opportunities which have garnered $1m dollars in revenues since we started mining late in Q4. The launch of LANduel later this year, our player-vs-player Skill based betting application, is also another hugely exciting addition to our Product suite.
We are still guiding to an annual revenue of over $100 million dollars in fiscal 2022, with a range of $16m-$16.5m in revenues for the 1st quarter, split approximately 90-10 between our iGaming and EEG Games businesses.
We are not providing guidance for 2022 adjusted EBITDA at this time, but we are squarely focused on reaching positive adjusted EBITDA, which we are still forecasting we will achieve before the end of calendar 2022. We will continue to advance our critical growth-focused investments, namely the development and enhancements of our proprietary betting and tournament platforms, but will realize revenue and expense benefits and savings from our enlarged group as the year progresses. And we’ll look forward to updating the market further throughout the year as we execute our plans.
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On one final and more technical note, we have experienced a tremendous amount of growth across the past year, both in terms of expansion, acquisition and capital-raising. This required a heavy lift over the last few months, which is why our call was delayed a couple of weeks to today. Moving forward, we will return to a more normal schedule, starting with the mid-November update on Q1.
Please can we now open the line for Q&A. Operator?
Operator
Thank you. We’ll go first to Michael Kupinski of Noble Capital Markets.
Michael Kupinski
Thank you. Thanks for taking the questions. Good afternoon. Can you provide an update on the expectations of revenue contributions that you expect from New Jersey? I know that you said that you think it’s going to be up and running in the next couple of weeks. I know in the past you’ve given us some thoughts in terms of the ramp in New Jersey. I was wondering if you can update us on what your thoughts are there.
Grant Johnson
(Multiple speakers) Okay. Go ahead, Dan.
Daniel Marks
Thanks for asking the question. I think we’ve been very prudent in our estimates with regards to the revenue contribution that New Jersey will give to us. It’s a very small part of the $100 million guidance as things stand. But I think we’re excited to launch there and see it as the only esports-lead gaming operation. We do see big opportunities; we’re just being prudent with regards to our forecast.
As things stand, it is a very small part of that $100 million. Obviously, as time progresses and we get our marketing plans in place, we hope to see it certainly growing as the months and years progress.
Michael Kupinski
In terms of the revenues in the Fiscal fourth quarter, obviously, they were in line with my expectations. Were there any surprises in terms of where the revenues came from, particularly looking at Argyll versus Lucky Dino versus Helix and so forth?
Daniel Marks
No surprises. To be honest, they were broadly in line with what we were hoping for. I think margins were down on the gross gaming side as we had some big winners, but our overall handle was up, which is a good combination to have looking forward as margins stabilize, and we should start seeing the benefit of that—sorry, not stabilize, as margins normalize. Obviously, having higher handle means we should see the benefit of that going forward. No, the forecasts were pretty much in line with our expectations.
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Michael Kupinski
In terms of just the expenses, G&A expenses were higher. Obviously, you had some transactional expenses in there. Can you just give us some thoughts though, in terms of how G&A expenses are going to look as we go forward into this quarter and maybe give us a run rate for those expenses, if you can?
Daniel Marks
Well, I know for a fact we had a $3 million to $4 million of one-off costs within our Q4 expense figures, our G&A expenses. Those will not be being repeated in our run rate going forward. I can provide additional detail separately with regards to what that total looks like. But it will certainly be lower without those one-off additional costs that we saw in Q4.
Michael Kupinski
Yes. It wasn’t surprising to see sales and marketing a little higher. Obviously you have a number of products and services that you’re out there marketing. I was wondering if you can give us some thoughts in terms of the elevation in sales and marketing and the new product launches. Is the Q4 a good run rate for upcoming quarters? Or do you think that we start to see, maybe as a percent of revenues, that that number comes down? How should we look at that number?
Daniel Marks
Well, with the acquisition of BetHard at the start of July, obviously our overall sales and marketing expenses will go up. We’ve obviously got a new brand within our overall group. From that perspective, sales and marketing will increase quarter-on-quarter. But certainly as the year progresses, sales as a percentage of revenues will start to decline as we get the benefits of the cross-sell opportunities that our strategy is intended to realize. We should be able to sell customers with between brands, thus reducing net CPAs per customer.
Michael Kupinski
You mentioned that your burn rate’s about $1 million a month, right? Can you just talk a little bit about your balance sheet at this point to support that growth, the growth that you anticipate, the capital expenditures, if you can give us some sense of what you’re expecting to spend as you go into Fiscal 2022? Just give us some thoughts in terms of the capital and capital allocation at this point?
Daniel Marks
Yes, in the past, we’ve got various routes to raising capital that Grant has alluded to earlier in the presentation. Our balance sheet as of today, around (inaudible) million dollars and we’re burning about $1 million a month, but we do have routes to additional capital that Grant has alluded to. We’ve shown that in the past, you can rate that and we are comfortable that we can do that going forward.
Michael Kupinski
Got you. That’s all I have. Thanks, guys.
Daniel Marks
Thank you.
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Operator
We’ll go next to Scott Buck of H.C. Wainwright.
Scott Buck
Hi. Good afternoon, guys. It looks like gross margins picked up a couple of 100 basis points this quarter versus last. How should we be thinking about the longer-term gross margin opportunity? Are we close to a ceiling there based on future revenue mix? Or is there still some extra room to expand?
Daniel Marks
The expectation is that with being in large group, certainly on the iGaming side, we should start being able to realize cost efficiencies. By that, I mean dealing with payment providers, casino games providers. We should be able to negotiate better deals because of the large volumes that we’re currently—the large group we will have. We’re at 59% in Q4, up from 57% in Q3. I still think there’s a couple of basis points, at least, improvement in that gross margin as (inaudible) progress. Obviously we’ll keep reporting on that as time goes on.
Scott Buck
Great, Dan, appreciate that color. Second, 2021 was obviously a busy year in terms of M&A. How should we think about 2022? Are you guys going to take a breather here and digest? Or will you continue to be active in the marketplace?
Grant Johnson
Yes, I’ll jump in there, Dan. At this point in time, we’re taking a breather, to use your phrase, getting the various assets we have integrated with each other and gain those efficiencies through that integration. That doesn’t mean that we’re completely out of the market. We keep our eyes open, we get opportunities to come our way frequently. If there is a unique opportunity that will substantially enhance the shareholder value or give us another strategic advantage, we would consider it. But for now, we are, again, taking a pause to consolidate what we currently have.
Scott Buck
Yes, that makes sense. Appreciate it, Grant, and appreciate the time today, guys. Thanks a lot.
Grant Johnson
Thank you.
Operator
We’ll go to our next question from Mike Hickey of Benchmark Company.
Mike Hickey
Hey Grant, Dan, Jeff, hope you guys are good. Congrats on the quarter. Just to take a step back, could you just remind us what you’re thinking about in terms of TAM on esports in the U.S.? It looks like you’re starting to accelerate some licensing opportunities. It seems like your team has had some success there with market access. Can you double click on that, and maybe how that changes or enhances your perspective, that opportunity in sports betting in the next few years or so? Thanks, guys.
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Grant Johnson
Sure. Actually, I’m going to call on Jeff to come in because he’s focused on the research specifically to that. Jeff, you want to pick up on the addressable market for gaming and iGaming combined?
Well, it doesn’t look like Jeff is on the phone. On the iGaming side, we’ve got our addressable market, which is the more mature market, of course. You’re in the $150 billion, $160 billion and growing. Esports and gaming is obviously still evolving, is evolving quickly. Depending which numbers you’re looking at, it’ll range anywhere from 16 to the mid-20s.
What we’re finding with these affiliations with the pro teams, it’s really getting us—these are super affiliates, effectively. That market is more on the gamer as opposed to the esports fan, which esports is a specific subcategory, so the addressable market there, it’s a little early for us to comment on those because we need to get a quarter or so under our belt. But the total addressable market between esports and iGaming, because we have a footprint in both where it makes us a bit unique in getting access to both of those, so our addressable market is closer to $170 billion to $180 billion versus if we were just focused on the much smaller and emerging esports market (inaudible).
We’ll update when we get a quarter of the gaming with pro teams, we will update you, I would think, the end of the first quarter next calendar year or our Q3.
Mike Hickey
Thanks, Grant. Just curious on FanDuel, where you guys are with that and how you think about the in-home opportunity? Thank you.
Grant Johnson
Yes, the software right now is complete, it’s in. We’re just waiting for the final approval so that we can proceed. We expect getting the final approval to hold our inaugural event in Atlantic City this fall.
Mike Hickey
Awesome. Thanks, guys.
Grant Johnson
Thank you.
Operator
We’ll move on to our next question from Lisa Springer of Singular Research.
Lisa Springer
Good afternoon. I wonder if you could give us more color around your partnership with the Indian Gaming Association and bringing esports technology to Indian casinos and how that’s going to roll out?
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Grant Johnson
Sure. IGEA, which is Ernie Stevens, the third, as you’re probably aware, Ernie Stevens Jr. is a chairman of NIGA. Ernie is his son. The initiative is to bring esports gaming opportunities to native communities. The focus of bringing that in will be generally through the Indian casino facilities. We’re presenting shortly in the East Coast Gaming Conference. There will be a number of the NIGA members invited as our guests to see the rollout of the LANduel product, but really is to give the opportunity to the various gamers in the native community for competing amongst themselves and the pathway through is going to be working with the casinos.
I would say that our strategy there was to partner with the largest possible group we could in the sector. As you know, NIGA represents about 50% of the U.S. gambling market. We feel we have the best partner in the biggest sector of the market. That’s the strategy.
Lisa Springer
Okay. Thank you.
Grant Johnson
You’re welcome.
Operator
We’ll go to a follow-up question from Michael Kupinski of Noble Capital Markets.
Michael Kupinski
Thank you. Thanks for taking another question. A quick question, you mentioned the cross-selling opportunities in gaming and possible cost synergies. I was just wondering if you could just add a little color on that, if you can put maybe some, what you think might be dollar figures around both what might be revenue synergies as well as the cost synergies?
Grant Johnson
Dan?
Daniel Marks
Yes, I can certainly provide the high level explanation on this. We have brands or casino brands or sports brands, we pay CPA to get a customer onto our casino on one of our brands. We can then cross-sell them into a sports brand and obviously save ourselves the $300, $400 acquisition it would cost otherwise, if we’re paying to acquire a brand new customer onto that brand.
With BetHard coming on board, we now have access to several new countries, several new licenses and we are able to move and sell customers between sportsbook, esports, casino and save ourselves the CPA. I can’t give you, at this stage, specifics around the expected upside from those synergies. I can certainly work on something separately in the coming weeks and provide that to you. But we certainly see it as a material upside and opportunity for us as the year progresses, once we fully integrated all of these operators within the overall group.
Michael Kupinski
Yes, it seems like there would be a fair amount of upside there. That’s the reason why I asked the question. That’s all I have. Thank you.
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Grant Johnson
Thank you.
Operator
That concludes today’s question-and-answer session. I’ll now turn the conference back to our presenters for any additional or closing comments.
Grant Johnson
Thank you. Thank you for the questions, and everybody, thank you for spending the time with us. As we continue to execute our plan, as you can clearly see by the numbers, it’s been a time of exciting radical growth. To quote one of the comments, we’re, at this point in time, focused on getting efficiencies out of the acquisitions we’ve made. I appreciate the support from our shareholders. We will continue to do our best to provide the most value to our shareholders. As I said myself, I am a shareholder, so my objectives are in direct lockstep with all of you on the phone today.
Again, thank you for your support. Thank you for coming to listen to our earnings call.
Operator
This concludes today’s call. Thank you for your participation. You may now disconnect.
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