GMBL Esports Entertainment Group Inc (QB)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 12b-25

 

NOTIFICATION OF LATE FILING

 

(Check one):		☐ Form 10-K ☐ Form 20-F ☐ Form 11-K ☒ Form 10-Q ☐ Form 10-D ☐ Form N-CEN ☐ Form N-CSR
		For Period Ended:	March 31, 2024
		☐ Transition Report on Form 10-K
		☐ Transition Report on Form 20-F
		☐ Transition Report on Form 11-K
		☐ Transition Report on Form 10-Q
		For the Transition Period Ended:

 

If the notification relates to a portion of the filing checked above, identify the Item(s) to which the notification relates:

 

PART I — REGISTRANT INFORMATION

 

ESPORTS ENTERTAINMENT GROUP, INC.

Full Name of Registrant

 

Former Name if Applicable

 

Block 6, Triq Paceville

Address of Principal Executive Office (Street and Number)

 

St. Julians, Malta, STJ 3109

City, State and Zip Code

 

 

 

PART II — RULES 12b-25(b) AND (c)

 

If the subject report could not be filed without unreasonable effort or expense and the registrant seeks relief pursuant to Rule 12b-25(b), the following should be completed. (Check box if appropriate)

 

☒		(a)	The reason described in reasonable detail in Part III of this form could not be eliminated without unreasonable effort or expense;
		(b)	The subject annual report, semi-annual report, transition report on Form 10-K, Form 20-F, Form 11-K, Form N-CEN or Form N-CSR, or portion thereof, will be filed on or before the fifteenth calendar day following the prescribed due date; or the subject quarterly report of transition report on Form 10-Q or subject distribution report on Form 10-D, or portion thereof will be filed on or before the fifth calendar day following the prescribed due date; and
		(c)	The accountant’s statement or other exhibit required by Rule 12b-25(c) has been attached if applicable.

 

PART III — NARRATIVE

 

State below in reasonable detail the reasons why Forms 10-K, 20-F, 11-K, 10-Q, 10-D, N-CEN, N-CSR, or the transition report or portion thereof, could not be filed within the prescribed time period.

 

ESPORTS ENTERTAINMENT GROUP, INC. (the “Registrant”) was unable, without unreasonable effort or expense, to file its Quarterly Report on Form 10-Q for the period ended March 31, 2024 (the “Quarterly Report”) by the deadline of May 15, 2024, the filing date applicable to non-accelerated filers. The delay experienced by the Registrant in completing its unaudited condensed consolidated financial statements and other disclosures in the Quarterly Report is due to challenges the Registrant has been facing since its delisting from the Nasdaq Capital Markets (“Nasdaq”). As a result, the Registrant is continuing to compile the required unaudited financial information to complete the Quarterly Report for the period ended March 31, 2024, to identify, evaluate and incorporate the effects of steps the Company has taken, including the amendments to the Series C Convertible Preferred Stock and the Series D Convertible Preferred Stock, that includes assessment of the balance sheet classification of the instruments, and may include recording additional derivative liabilities, warrant liabilities, among other changes.

 

PART IV — OTHER INFORMATION

 

(1)	Name and telephone number of person to contact in regard to this notification

 

Alex Igelman		(356)		2713 1276
(Name)		(Area Code)		(Telephone Number)

 

(2)	Have all other periodic reports required under Section 13 or 15(d) of the Securities Exchange Act of 1934 or Section 30 of the Investment Company Act of 1940 during the preceding 12 months or for such shorter period that the registrant was required to file such report(s) been filed? If answer is no, identify report(s).
	Yes ☒ No ☐
(3)	Is it anticipated that any significant change in results of operations from the corresponding period for the last fiscal year will be reflected by the earnings statements to be included in the subject report or portion thereof?
	Yes ☒ No ☐
	If so, attach an explanation of the anticipated change, both narratively and quantitatively, and, if appropriate, state the reasons why a reasonable estimate of the results cannot be made.
	The following table provides preliminary summary unaudited financial information based on a compilation of financial results that is currently available. It is not a comprehensive statement of the Registrant’s financial results and is subject to change.   The preliminary unaudited financial information below includes ranges rather than specific amounts as financial statement closing procedures for the three and nine months ended March 31, 2024, are not yet complete. These estimates should not be viewed as a substitute for the Registrant’s completed unaudited financial statements prepared in accordance with generally accepted accounting principles in the United States, or GAAP. The results for the three and nine months ended March 31, 2024, are expected to be fundamentally different from the same period in the prior year.

 

 

	The preliminary estimated results below are not necessarily indicative of the results to be expected for any future period. See the sections titled “Cautionary Statements Regarding Forward-Looking Information” and “Risk Factors”, including, those on material weaknesses in internal control of financial reporting, income taxes, and information technology general controls which remain unremediated, in our filings with the SEC, for additional information regarding factors that could result in differences between the preliminary estimated ranges of certain of our unaudited financial data presented below and the actual unaudited financial data we will report for the three and nine months ended March 31, 2024. While the Registrant continues efforts to remediate the material weaknesses, management cannot provide assurance as to when such remediation will conclude, nor can management be certain of whether additional actions will be required or the costs of any such actions may cause further delays. Our independent registered public accountants have not audited, reviewed, compiled or performed any procedures with respect to this financial information. Accordingly, our independent registered public accountants do not express an opinion or provide any form of assurance with respect thereto.
	The preliminary unaudited estimated ranges for net revenues and operating expenses, for the three and nine months ended March 31, 2024 follow:

 

		Three Months Ended March 31, 2024 Estimated (Unaudited)								Nine Months Ended March 31, 2024 Estimated (Unaudited)
		Low				High				Low				High
Net Revenue (1)		$	1,700,000			$	1,800,000			$	6,900,000			$	7,000,000
Operating expenses(2)		$	(3,500,000	)		$	(3,600,000	)		$	(30,300,000	)		$	(30,400,000	)

 

	(1)	Net revenue is expected to have decreased significantly, as result of: (i) the sale of the Bethard iGaming business and Spanish iGaming operations and (ii) the previous closing and liquidation and deconsolidation of the Argyll iGaming operations, which have impacted the three months and nine months ended March 31, 2024, when compared to the three months and nine months ended March 31, 2023, respectively. For the prior three and nine months period ended March 31, 2023, net revenue was $4.2 million and $20.2 million, respectively.
	(2)	Operating expenses have also significantly reduced as a result of the sale and liquidations of the businesses noted above and other cost reductions. For the prior three and nine months ended March 31, 2023, operating expenses was $(13.8) million and $(57.4) million, respectively.

 

Liquidity

 

The Registrant has an accumulated deficit and it has a history of recurring losses from operations and recurring negative cash flows from operations. At March 31, 2024, the Registrant had approximately $1.0 million of available cash on-hand. The amount of available cash on hand on May 14, 2024, one business day preceding this filing, was approximately $0.6 million. The Registrant believes that its current level of cash is not sufficient to fund its operations and obligations without additional financing. The ability to raise financing is subject to several factors, including market and economic conditions, performance, and investor sentiment as it relates to the Registrant and the esports and iGaming industry. The combination of these conditions was determined to raise substantial doubt regarding the Registrant’s ability to continue as a going concern.

 

The Registrant’s current liquidity as well as future market and economic conditions may be deemed outside the control of the Registrant as it relates to obtaining financing and generating future profits. The Registrant’s additional financing sources are expected to be directly from lenders, investors or through future offerings, where the amount of the offering has not yet been determined and potential sales of assets.

 

 

ESPORTS ENTERTAINMENT GROUP, INC.

(Name of Registrant as Specified in Charter)

 

has caused this notification to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: May 15, 2024	By:	/s/ Alex Igelman
	Name:	Alex Igelman
	Title:	Chief Executive Officer

 

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