Current Report Filing (8-k)
February 17 2023 - 7:48AM
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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): February 14, 2023
ESPORTS
ENTERTAINMENT GROUP, INC.
(Exact
name of registrant as specified in its charter)
Nevada |
|
001-39262 |
|
26-3062752 |
(State
or other jurisdiction of |
|
(Commission |
|
(IRS
Employer |
incorporation
or organization) |
|
File
Number) |
|
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)
Not
Applicable
(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 |
10.0%
Series A Cumulative Redeemable Convertible Preferred Stock |
|
GMBLP |
|
The
Nasdaq Stock Market LLC |
Common
Stock Purchase Warrants |
|
GMBLZ |
|
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
1.01 Entry into a Material Definitive Agreement
On
February 14, 2023, Esports Entertainment Group, Inc. (“Company”) and Gameday Group PLC (“Purchaser”) entered
into a share purchase agreement (“Purchase Agreement”) for the sale of the Company’s Bethard business, an online operator
of casino and sportsbook brands that is licensed in Malta and Sweden. Under the terms of the Purchase Agreement, the Purchaser will acquire
the shares of Prozone Limited, a company registered in Malta for total purchase consideration determined between the parties of approximately
€9.5 million (approximately $10.2 million using exchange rates in effect on the date of the Purchase Agreement) comprised of €1.65
million (approximately $1.77 million using exchange rates in effect on the date of the Purchase Agreement) of cash proceeds payable to
the Company at closing, with an additional €6.5 million (approximately $7.0 million using exchange rates in effect on the date of
the Purchase Agreement) of purchase consideration attributed to the Company’s release from payment of its contingent consideration
liability from the Bethard acquisition. The purchaser of the Bethard business will also assume liabilities of approximately €1.2
million (approximately $1.3 million using exchange rates in effect on the date of the Purchase Agreement). The terms of sale allow for
a cash holdback of €0.15 million (approximately $0.16 million using exchange rates in effect on the date of the Purchase Agreement)
which may be retained by the purchaser should liabilities exceed agreed upon amounts in the Purchase Agreement.
The
closing date (“Closing Date”) of the sale of the Bethard Business is subject to closing terms and conditions as outlined
in the Purchase Agreement. The Purchase Agreement sets forth a two-week period for the Company to satisfy certain conditions for completion
of sale following the signing of the Purchase Agreement.
The
Company entered into an Amendment and Waiver Agreement (“Amendment”) on February 16, 2023 as a condition to the closing of
the sale of the Bethard business. The Amendment requires the Company to deposit 50% of the proceeds from the sale of the Bethard business
in a bank account in favor of the holder (the “Debt Holder”) of its Senior Convertible Note, dated February 22, 2022 (the
“Senior Convertible Note”). The Amendment also requires the Company to deposit 50% of the proceeds of any permitted future
sale of assets or any subsequent debt or equity offer or sale (a “Securities Transaction”) and 100% of the proceeds of any
additional indebtedness incurred in the future, into such bank account in favor of the Debt Holder, or, at the option of the Debt Holder,
redeem amounts under the Senior Convertible Note using such proceeds.
The
Amendment also modifies the Senior Convertible Note to increase the principal balance by $2.95 million for additional interest and other
amounts previously recorded by the Company as liabilities to the Debt Holder, as well as for fees for the Amendment. The Amendment further
provides for a voluntary reduction in the Conversion Price (as defined in the Senior Convertible Note) when the Company issues or is
deemed to issue common stock in a future registered offering at a price below the Conversion Price then in effect, to the lower issuance
price in such offering, subject to certain exceptions. The Amendment also provides rights to the Debt Holder to participate in future
Securities Transactions for a period of two years from the later of the date of the Amendment and the date that no payment amounts due
to the Debt Holder remain outstanding.
This
summary of the Purchase Agreement and Amendment does not purport to be complete and is qualified in its entirety by reference to the
provisions of the Purchase Agreement and Amendment, copies of which are filed as Exhibit 10.1 and Exhibit 10.2 to this Current Report
on Form 8-K and incorporated herein by reference.
Item
8.01 Other Events.
The
full text of the press release announcing the sale of the Bethard business is attached as Exhibit 99.1 hereto and is incorporated herein
by reference.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits
Forward-Looking
Statements
The
information contained herein includes forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995.
Forward-looking statements generally can be identified by words such as “anticipates,” “believes,” “estimates,”
“expects,” “intends,” “plans,” “predicts,” “projects,” “will be,”
“will continue,” “will likely result,” and similar expressions. 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, including, the amount of debt for equity exchanges we will
be able to effect, the conversion price, and for what period of time such exchanges will continue to occur, if at all. 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. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in our most
recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q, and those discussed in other documents we file with
the SEC, including, our significant indebtedness, and our obligations under our Senior Convertible Note, our ability to continue as a
going concern, and our ability to regain compliance with Nasdaq Listing Rules. 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, unless required by law. The safe harbor for forward-looking statements contained
in the Private Securities Litigation Reform Act of 1995 protects companies from liability for their forward-looking statements if they
comply with the requirements of such Act.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Date:
February 17, 2023
|
ESPORTS
ENTERTAINMENT GROUP, INC. |
|
|
|
By: |
/s/
Michael Villani |
|
Name:
|
Michael
Villani |
|
Title: |
Interim
Chief Financial Officer and Controller |
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