UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 8-K/A

(Amendment No. 1)

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): March 1, 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.)

 

13/14 Penthouse Office, Mannarino Road

Birkirkara, Malta, BKR 9080

(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. [  ]

 

 

 

 
 

 

Explanatory Note

 

As previously reported on March 1, 2021, Esports Entertainment Group, Inc. (the “Company”), filed a Current Report on Form 8-K (the “Initial Report”) to report the closing of an asset purchase agreement (the “Purchase Agreement”), by and among Esports Entertainment (Malta) Limited (“EEL”), a wholly owned subsidiary of the Company, LHE Enterprises Limited (“LHE”), and AHG Entertainment, LLC (“AHG”), Lucky Dino Gaming Limited, a company registered in Malta (“Lucky Dino”), and Hiidenkivi Estonia OU, a company registered in Estonia (“HEOU” and, together with Lucky Dino, the “Sellers”) whereby EEL purchased and assumed from the Sellers substantially all the assets and certain specified liabilities of the Sellers’ business of real money online casino gaming (the “Acquired Business”).

 

The Initial Report contained (i) the audited consolidated financial statements of the Acquired Business as of and for the years ended December 31, 2019 and 2018, together with the related notes to the consolidated financial statements and (ii) the unaudited condensed consolidated financial statements of the Acquired Business as of September 30, 2020 and for the nine months ended September 30, 2020 and 2019, together with the related notes to the unaudited condensed consolidated financial statements.

 

This Current Report on Form 8-K/A (this “Amendment”) amends and supplements the Initial Report to provide the pro forma financial information of the Company required by Item 9.01 of Form 8-K. No other modifications to the Initial Report are being made by this Amendment. This Amendment should be read in connection with the Initial Report, which provides a more complete description of the Purchase Agreement and transactions contemplated thereby.

 

Item 9.01. Exhibits.

 

(b) Pro Forma Financial Information.

 

The unaudited pro forma combined financial statements of Company as of December 31, 2020 and for the year ended June 30, 2020 and the six months ended December 31, 2020, together with the related notes to the unaudited pro forma condensed combined financial information, are included as Exhibit 99.1 to this Current Report and are incorporated herein by reference.

 

(d) Exhibits

 

Exhibit No.   Exhibit
99.1  

Unaudited Pro Forma Combined Financial Statements of Esports Entertainment Group, Inc. as of December 31, 2020 and for the year ended June 30, 2020 and the six months ended December 31, 2020.

 

 
 

 

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: March 31, 2021 By: /s/ Grant Johnson
    Grant Johnson
    Chief Executive Officer

 

 

 

 

Exhibit 99.1

 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

On March 1, 2021, Esports Entertainment Group, Inc. (the “Company”) completed its acquisition of the operating assets and specified liabilities that comprise the online gaming operations of Lucky Dino Gaming Limited, a company registered in Malta, and Hiidenkivi Estonia OU, its wholly owned subsidiary registered in Estonia (collectively referred to as “Lucky Dino”). The acquisition of the assets of Lucky Dino was completed in accordance with an asset purchase agreement dated December 14, 2020 (“Lucky Dino Asset Purchase Agreement”) resulting in the payment of cash by the Company of €25,000,000 (approximately $30,645,000 using exchange rates in effect at the acquisition date). The purchase consideration was substantially financed through the issuance of common stock to certain investors pursuant to a share purchase agreement dated February 11, 2021 (herein referred to as the “Lucky Dino Equity Financing”). The Lucky Dino Equity Financing resulted in the issuance of 2,000,000 shares at a price per share of $15.00 and raised gross proceeds of $30,000,000. The net proceeds from the Lucky Dino Equity Financing, after underwriting fees and offering expenses, was $27,340,000.

 

The accompanying unaudited pro forma condensed combined financial statements (“unaudited pro forma financial information”) has been prepared based on the historical financial statements of the Company and Lucky Dino after giving effect to the Lucky Dino Asset Purchase Agreement. The pro forma financial information is intended to provide information about how the acquisition of Lucky Dino may have affected the Company’s historical financial statements. The unaudited pro forma condensed combined statements of operations and comprehensive loss for the six months ended December 31, 2020 and the year ended June 30, 2020, combines the historical consolidated financial statements of the Company for these periods, derived from the Company’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission (“SEC”) on February 16, 2021, and Annual Report on Form 10-K filed with the SEC on October 1, 2020, with the respective historical consolidated statements of income and comprehensive income of Lucky Dino as if the acquisition of Lucky Dino had occurred on July 1, 2019. The unaudited pro forma condensed combined balance sheet at December 31, 2020 combines the historical consolidated balance sheet of the Company as derived from the Quarterly Report on Form 10-Q filed with the SEC on February 16, 2021, and the historical consolidated balance sheet of Lucky Dino as of September 30, 2020 on a pro forma basis as if the acquisition of Lucky Dino occurred on December 31, 2020.

 

The historical unaudited pro forma condensed combined statement of operations and comprehensive loss for the six months ended December 31, 2020 combines the Company’s historical unaudited consolidated statement of operations and comprehensive loss for the six months ended December 31, 2020 with the historical unaudited consolidated results of Lucky Dino during the same six month period. The historical unaudited pro forma condensed combined statement of operations and comprehensive loss for the year ended June 30, 2020 combines the Company’s historical audited consolidated statement of operations and comprehensive loss for the year ended June 30, 2020 with the results of Lucky Dino derived by adding the historical unaudited condensed consolidated statement of income and comprehensive income of Lucky Dino for the nine months ended September 30, 2020 to its historical audited consolidated statement of income and comprehensive income for the year ended December 31, 2019, and then subtracting the historical unaudited condensed consolidated statement of income and comprehensive income for the nine months ended September 30, 2019.

 

The fiscal year end of the Company is June 30 and the fiscal year end of Lucky Dino is December 31. As a result of the difference in the year ends: (a) the consolidated results of Lucky Dino for the three months ended September 30, 2020 are included more than once in the pro forma financial information; and (b) the consolidated results of Lucky Dino for the nine months ended September 30, 2019 are excluded from the pro forma financial information. The revenue and net income of Lucky Dino for the three months ended September 30, 2020 were $5,818,094 and $68,816 respectively. The revenue and net income of Lucky Dino for the nine months ended September 30, 2019 were $12,732,985 and $917,205, respectively.

 

 

 

 

The unaudited pro forma financial information should be read in conjunction with the accompanying notes to the unaudited pro forma financial information and:

 

● the historical unaudited condensed consolidated financial statements of the Company for the three and six months ended December 31, 2020 included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on February 16, 2021;

 

● the historical audited consolidated financial statements of the Company for the year ended June 30, 2020 included in the Company’s Annual Report on Form 10-K filed with the SEC on October 1, 2020;

 

● the historical unaudited condensed consolidated financial statements of Lucky Dino for the nine months ended September 30, 2020 and 2019 as included in the Current Report on Form 8-K filed with the SEC on March 1, 2021;

 

● the historical audited consolidated financial statements of Lucky Dino for the years ended December 31, 2019 and 2018, as included in the Current Report on Form 8-K filed with the SEC on March 1, 2021.

 

● the Securities Purchase Agreement entered into by the Company and certain investors to raise proceeds to finance the acquisition of Lucky Dino through the issuance of common stock, discussed above and referred to herein as the Lucky Dino Equity Financing, as included in the Current Report on Form 8-K filed with the SEC on February 11, 2021.

 

● the announcement of the closing of the Lucky Dino Equity Financing and the filing of a final prospectus related to the consummation of the offering, as included in the Current Report on Form 8-K filed with the SEC on February 16, 2021.

 

The unaudited pro forma financial information has been presented for illustrative purposes only and do not necessarily reflect what the combined company’s financial condition or results of operations would have been had the acquisition of Lucky Dino occurred on the dates indicated. Further, the unaudited pro forma financial information also may not be useful in predicting the future financial condition and results of operations of the combined company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma transaction accounting adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma condensed combined financial statements and are subject to change as additional information becomes available and analyses are performed.

 

 

 

 

Esports Entertainment Group, Inc.

Pro Forma Condensed Combined Balance Sheet

December 31, 2020

(Unaudited)

  

    Historical     Pro Forma  
    Esports Entertainment Group, Inc.     Lucky Dino Gaming Limited     Transaction Accounting Adjustments     Notes     Other Transaction Accounting Adjustments     Notes     Pro Forma Combined  
ASSETS                                          
                                           
Current assets                                                        
Cash   $ 5,571,431     $ 753,774     $ (31,398,774 )     (a)     $ 27,340,000       (e)     $ 2,266,431  
Restricted cash     2,006,752       838,611       (838,611 )     (c)       -               2,006,752  
Receivables reserved for users     322,215       1,365,050       (1,365,050 )     (c)       -               322,215  
Loans receivable     1,000,000       -       -               -               1,000,000  
Other receivables     808,946       278,402       861,987       (c)       -               1,949,335  
Related party receivables     -       1,239,578       (1,239,578 )     (c)       -               -  
Prepaid expenses and other current assets     891,281       134,869       (134,869 )     (c)       -               891,281  
Total current assets     10,600,625       4,610,284       (34,114,895 )             27,340,000               8,436,014  
                                                         
Equipment, net     67,470       65,940       -               -               133,410  
Right-of-use asset     302,534       364,405       -               -               666,939  
Intangible assets, net     6,474,036       23,193       -           -               6,497,229  
Goodwill     6,908,592       -       30,566,617       (b)       -               37,475,209  
Other non-current assets     1,169,405       -       -               -               1,169,405  
                                                         
TOTAL ASSETS   $ 25,522,662     $ 5,063,822     $ (3,548,278 )           $ 27,340,000             $ 54,378,206  
                                                         
LIABILITIES AND STOCKHOLDERS’ EQUITY                                                        
                                                         
Accounts payable and accrued expenses   $ 3,351,150     $ 1,038,331     $ (502,260 )     (c)     $ -             $ 3,887,221  
Liabilities to customers     2,229,724       604,318       -               -               2,834,042  
Taxes payable     40,642       1,642,985       (1,642,985 )     (c)       -               40,642  
Warrant liability     4,859,782       -       -               -               4,859,782  
Notes payable - current     26,880       -       -               -               26,880  
Operating lease liability - current     143,443       86,629       -               -               230,072  
Contingent consideration - current     500,000       -       -               -               500,000  
Total current liabilities     11,151,621       3,372,263       (2,145,245 )             -               12,378,639  
                                                         
Notes payable     314,410       -       -               -               314,410  
Operating lease liability     74,450       288,526       -               -               362,976  
                                                         
TOTAL LIABILITIES     11,540,481       3,660,789       (2,145,245 )             -               13,056,025  
                                                         
Stockholders’ equity                                                        
Preferred stock     -       -       -               -               -  
Common stock     13,580       1,453       (1,453 )     (d)       2,000       (e)       15,580  
Additional paid-in capital     43,665,482       112,788       (112,788 )     (d)       27,338,000       (e)       71,003,482  
Accumulated deficit     (29,634,132 )     1,257,117       (1,257,117 )     (d)       -               (29,634,132 )
Accumulated other comprehensive income (loss)     (62,749 )     31,675       (31,675 )     (d)       -               (62,749 )
Total stockholders’ equity     13,982,181       1,403,033       (1,403,033 )             27,340,000               41,322,181  
                                                         
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 25,522,662     $ 5,063,822     $ (3,548,278 )           $ 27,340,000             $ 54,378,206  

 

 

 

 

Esports Entertainment Group, Inc.

Pro Forma Condensed Combined Statement of Operations and Comprehensive Loss

For the Year Ended June 30, 2020

(Unaudited)

 

    Historical     Pro Forma  
    Esports Entertainment Group, Inc.     Lucky Dino Gaming Limited     Transaction Accounting Adjustments     Notes     Other Transaction Accounting Adjustments     Notes     Pro Forma
Combined 		 
                                           
Net revenue   $ -     $ 21,233,214     $ -         $ -         $ 21,233,214  
                                                     
Operating costs and expenses:                                                    
Cost of revenue     -       14,086,431       -             -             14,086,431  
Sales and marketing     322,517       1,103,091                                   1,425,608  
General and administrative     3,727,197       3,174,418             -             -             6,901,615  
                                                     
Total operating expenses     4,049,714       18,363,940       -             -             22,413,654  
                                                     
Operating income (loss)     (4,049,714 )     2,869,274       -             -             (1,180,440 )
                                                     
Other income (expense):                                                    
Interest expense     (1,995,458 )     -       -             -             (1,995,458 )
Net amortization of debt discount and premium on convertible debt     (1,156,877 )     -       -             -             (1,156,877 )
Change in fair value of derivative liabilities     (2,432,302 )     -       -             -             (2,432,302 )
Loss on extinguishment of debt, net     (2,795,582 )     -       -             -             (2,795,582 )
Gain on warrant exchange     1,894,418       -       -             -             1,894,418  
Other non-operating income     186,498       (10,165 )     -             -             176,333  
                                                     
Income (loss) before income taxes     (10,349,017 )     2,859,109       -             -             (7,489,908 )
Income tax expense     2,398       1,062,464       -             -             1,064,862  
                                                     
Net income (loss)     (10,351,415 )     1,796,645       -             -             (8,554,770 )
                                                     
Other comprehensive ncome (loss):                                                    
 Foreign currency translation gain     -       60,028       -             -             60,028  
                                                     
Total comprehensive income (loss)   $ (10,351,415 )   $ 1,856,673     $ -           $ -           $ (8,494,742 )
Basic and diluted loss per common share   $ (1.50 )                                       $ (0.96 )
                                                     
Weighted average number of common shares outstanding, basic and diluted     6,880,321                             2,000,000     (e)       8,880,321  

 

 

 

 

Esports Entertainment Group, Inc.

Pro Forma Condensed Combined Statement of Operations and Comprehensive Loss

For the Six Months ended December 31, 2020

(Unaudited)

 

    Historical     Pro Forma  
    Esports Entertainment Group, Inc.     Lucky Dino Gaming Limited     Transaction Accounting Adjustments     Notes     Other Transaction Accounting Adjustments     Notes     Pro Forma
Combined 		 
                                           
Net revenue   $ 2,584,585     $ 12,964,925     $ -         $ -         $ 15,549,510  
                                                     
Operating costs and expenses:                                                    
Cost of revenue     1,753,753       8,957,398       -             -             10,711,151  
Sales and marketing     2,492,488       373,603       -             -             2,866,091  
General and administrative     7,965,239       1,819,436       -             -             9,784,675  
                                                     
Total operating expenses     12,211,480       11,150,437       -             -             23,361,917  
                                                     
Operating income (loss)     (9,626,895 )     1,814,488       -             -             (7,812,407 )
                                                     
Other income (expense):                                                    
Interest expense     (1 )     -       -             -             (1 )
Change in fair value of warrant liability     628,389       -                    -             -             628,389  
Other non-operating income (expense)     (100,023 )     (3,281 )     -             -             (103,304 )
                                                     
Income (loss) before income taxes     (9,098,530 )     1,811,207       -             -             (7,287,323 )
Income tax expense     -       670,222       -             -             670,222  
                                                     
Net income (loss)     (9,098,530 )     1,140,985       -             -             (7,957,545 )
                                                     
Other comprehensive income (loss):                                                    
Foreign currency translation loss     (62,749 )     (1 )     -             -             (62,750 )
                                                     
Total comprehensive income (loss)   $ (9,161,279 )   $ 1,140,984     $ -           $ -           $ (8,020,295 )
Basic and diluted loss per common share   $ (0.73 )                                       $ (0.55 )
                                                     
Weighted average number of common shares outstanding, basic and diluted     12,518,507                             2,000,000     (e)       14,518,507  

 

 

 

 

NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

 

Note 1 - Description of Transaction

 

On March 1, 2021, Esports Entertainment Group, Inc. (the “Company”) completed its acquisition of the operating assets and specified liabilities that comprise the online gaming operations of Lucky Dino Gaming Limited, a company registered in Malta, and Hiidenkivi Estonia OU, its wholly owned subsidiary registered in Estonia (collectively referred to as “Lucky Dino”). Lucky Dino is licensed by the Malta Gaming Authority to operate online casinos under four brands, namely luckydino.com, casinojefe.com, kalevalakasino.com, and olaspill.com. The acquisition of the assets of Lucky Dino (“Lucky Dino Asset Purchase”) was completed in accordance with an asset purchase agreement dated December 14, 2020 resulting in the payment of cash by the Company of €25,000,000 (approximately $30,645,000 using exchange rates in effect at the acquisition date). The purchase price of Lucky Dino was substantially financed through the issuance of common stock to certain investors (herein referred to as the “Lucky Dino Equity Financing”). The Company issued 2,000,000 shares of common stock at a price per share of $15.00 and raised net proceeds of $27,340,000 after deducting underwriting fees and offering expenses of $2,660,000.

 

Note 2 - Basis of Pro Forma Presentation

 

The unaudited pro forma condensed combined balance sheet gives effect to the Lucky Dino Asset Purchase as if the acquisition occurred on December 31, 2020. The unaudited pro forma condensed combined statement of operations and comprehensive loss for the year ended June 30, 2020 and the six months ended December 31, 2020 give effect to the Lucky Dino acquisition as if it had occurred on July 1, 2019.

 

The Company and Lucky Dino have different fiscal year-ends. The Company’s fiscal year ends on June 30, whereas Lucky Dino’s fiscal year ends on December 31. The unaudited pro forma condensed combined financial information has been prepared utilizing period ends that are within 93 days, as permitted by Rule 11-02 Regulation S-X. The unaudited pro forma condensed combined balance sheet combines the historical unaudited condensed consolidated balance sheet of the Company at December 31, 2020 with the historical unaudited condensed consolidated balance sheet of Lucky Dino as of September 30, 2020. The historical unaudited pro forma condensed combined statement of operations and comprehensive loss for the year ended June 30, 2020 combines the Company’s historical audited consolidated statement of operations and comprehensive loss for the year ended June 30, 2020 with the results of Lucky Dino derived by adding the historical unaudited condensed consolidated statement of income and comprehensive income of Lucky Dino for the nine months ended September 30, 2020 to its historical audited consolidated statement of income and comprehensive income for the year ended December 31, 2019, and then subtracting the historical unaudited condensed consolidated statement of income and comprehensive income for the nine months ended September 30, 2019. The historical unaudited pro forma condensed combined statement of operations and comprehensive loss for the six months ended December 31, 2020 combines the Company’s historical unaudited condensed consolidated statement of operations and comprehensive loss for the six months ended December 31, 2020 with the historical unaudited condensed consolidated results of Lucky Dino during the same six month period.

 

The Lucky Dino Asset Purchase was determined to qualify as a business combination. The acquisition accounting included in the unaudited pro forma condensed combined financial statements is preliminary and will change in connection with the work being performed by a third-party valuation specialist. While the Company has engaged a valuation specialist to estimate the fair value of identifiable intangible assets, the valuation requires the Company to provide additional information to determine preliminary values. As a result, differences between the acquisition accounting included in the pro forma financial information and the final acquisition accounting could be material.

 

Note 3 – Accounting Policies

 

The accounting policies of the Company may vary materially from those of Lucky Dino. During preparation of the unaudited pro forma condensed combined financial information, the Company has performed a preliminary analysis and is not aware of any material differences, and accordingly, this unaudited pro forma condensed combined financial information assumes no material differences in accounting policies between the two companies other than the pro forma reclassifications detailed in Note 4. Following the acquisition date, the Company will conduct a final review of Lucky Dino’s accounting policies in order to determine if differences in accounting policies require adjustment or reclassification of Lucky Dino’s results of operations or reclassification of assets or liabilities to conform to the accounting policies and classifications of the Company. As a result of this review, the Company may identify differences that when adjusted or reclassified, could have a material impact on this unaudited pro forma condensed combined financial information.

 

 

 

 

Note 4 – Reclassification Adjustments

 

Certain reclassifications have been made to Lucky Dino’s historical balance sheet to conform the to the Company’s presentation as follows:

 

    September 30, 2020  
   

Lucky Dino

before reclassifications

    Reclassifications    

Lucky Dino

after reclassifications

 
Deposit receivables   $ 1,365,050     $ (1,365,050 )   $ -  
Receivables reserved for users     -       1,365,050       1,365,050  
Trade and other payables     331,907       (331,907 )     -  
Accrued expenses     343,895       (343,895 )     -  
Jackpot provision     362,529       (362,529 )     -  
Accounts payable and accrued expenses     -       1,038,331       1,038,331  
Accrued loyalty points     139,951       (139,951 )     -  
Player liability     464,367       (464,367 )     -  
Liabilities to customers     -       604,318       604,318  

 

Certain reclassifications have been made to Lucky Dino’s historical consolidated results of operations to conform to the to the Company’s presentation as follows:

 

    Year ended June 30, 2020  
   

Lucky Dino

before reclassifications

    Reclassifications    

Lucky Dino

after reclassifications

 
Gaming costs and expenses   $ 14,086,341     $ (14,086,431 )   $ -  
Cost of revenue     -       14,086,431       14,086,431  
Marketing     1,103,091       (1,103,091 )     -  
Sales and marketing     -       1,103,091       1,103,091  
Depreciation and amortization     27,323       (27,323 )     -  
Bad debt expense     28,566       (28,566 )     -  
General and administrative     3,118,529       55,889       3,174,418  
Foreign currency transaction loss     (10,585 )     10,585       -  
Other income     420       (420 )     -  
Other non-operating expense     -       (10,165 )     (10,165 )

 

    Six months ended December 31, 2020  
   

Lucky Dino

before reclassifications

    Reclassifications    

Lucky Dino

after reclassifications

 
Gaming costs and expenses   $ 8,957,398     $ (8,957,398 )   $ -  
Cost of revenue     -       8,957,398       8,957,398  
Marketing     373,603       (373,603 )     -  
Sales and marketing     -       373,603       373,603  
Depreciation and amortization     27,942       (27,942 )     -  
General and administrative     1,791,494       27,942       1,819,436  
Foreign currency transaction loss     (5,570 )     5,570       -  
Other income     2,289       (2,289 )     -  
Other non-operating expense     -       (3,281 )     (3,281 )

 

Note 5 – Transaction Accounting Adjustments

 

a) Represents the payment of the purchase consideration of €25,000,000 at closing (equivalent to approximately $30,645,000 using exchange rates at the acquisition date) and the cash balance on hand of Lucky Dino at September 30, 2020 of $753,774 that is excluded from the Lucky Dino Asset Purchase.
b) Represents the estimate of goodwill resulting from the Lucky Dino Asset Purchase determined using the purchase consideration of $30,645,000 and net assets acquired of Lucky Dino of $78,383 at September 30, 2020. The estimate of goodwill is subject to change materially in connection with the work being performed by a third-party valuation specialist as it relates to determination of the fair value for the identifiable intangible assets acquired in the transaction.
c) Represents assets and liabilities that were excluded from the Lucky Dino Asset Purchase. The Lucky Dino Asset Purchase resulted in the Company assuming the Player liability of $604,318 as well as jackpot liabilities totaling $536,071 that are included within Accounts payable and accrued expenses in the unaudited pro forma condensed combined balance sheet. A transaction accounting adjustment is recorded to Other receivables in the unaudited pro forma condensed combined balance sheet to reflect deposits payable to the Company for the Player liability and jackpot liabilities that were assumed at closing.
d) Represents the elimination of Lucky Dino’s historical common stock, additional paid-in capital, accumulated deficit, and accumulated other comprehensive income.
e) Represents the issuance of 2,000,000 shares of the Company’s common stock at a price of $15.00 per share pursuant to the Lucky Dino Equity Financing resulting in gross proceeds of $30,000,000. The Company received proceeds net of offering costs of $27,340,000 from the Equity Financing.