Esports Entertainment Group, Inc.
(formerly VGambling Inc.)
Consolidated Statements of Changes in Stockholders Equity
(Amounts expressed in US dollars)
|
|
|
|
|
|
| |
|
Common Stock
|
APIC
|
Equity to be issued
|
Accumulated Deficit
|
Subscription Receivable
|
Total
|
|
Shares
|
Amount
|
|
|
|
|
|
|
#
|
$
|
$
|
$
|
$
|
$
|
$
|
Balance as at June 30, 2016
|
70,105,514
|
70,106
|
955,015
|
-
|
(936,228)
|
(300)
|
88,593
|
|
|
|
|
|
|
|
|
Common stock and units issued for cash, net of costs
|
8,322,504
|
8,322
|
1,188,111
|
-
|
-
|
(30,000)
|
1,166,433
|
|
|
|
|
|
|
|
|
Common stock and units issued for services
|
1,340,440
|
1,340
|
253,511
|
-
|
-
|
-
|
254,851
|
|
|
|
|
|
|
|
|
Net loss for the period
|
-
|
-
|
-
|
-
|
(837,932)
|
-
|
(837,932)
|
|
|
|
|
|
|
|
|
Balance as at June 30, 2017
|
79,768,458
|
79,768
|
2,396,637
|
-
|
(1,774,160)
|
(30,300)
|
671,945
|
|
|
|
|
|
|
|
|
Common stock and units issued for services
|
690,000
|
690
|
410,310
|
-
|
-
|
-
|
411,000
|
|
|
|
|
|
|
|
|
Common stock and units issued for cash, net of costs
|
2,296,967
|
2,297
|
618,888
|
-
|
-
|
30,300
|
651,485
|
|
|
|
|
|
|
|
|
Warrants exercised for cash
|
825,834
|
826
|
101,094
|
-
|
-
|
-
|
101,920
|
|
|
|
|
|
|
|
|
Issuance of stock options
|
-
|
-
|
79,328
|
-
|
-
|
-
|
79,328
|
|
|
|
|
|
|
|
|
Equity to be issued
|
-
|
-
|
-
|
379,102
|
-
|
-
|
379,102
|
|
|
|
|
|
|
|
|
Net loss for the period
|
-
|
-
|
-
|
-
|
(2,028,662)
|
-
|
(2,028,662)
|
|
|
|
|
|
|
|
|
Balance as at June 30, 2018
|
83,581,259
|
83,581
|
3,606,257
|
379,102
|
(3,802,822)
|
-
|
266,118
|
See accompanying notes to consolidated financial statements
|
Esports Entertainment Group, Inc.
(Formerly VGambling Inc.)
Notes to the Consolidated Financial Statements
June 30, 2018 and 2017
(Expressed in U.S. dollars)
1.
Nature of Operations and Going Concern
Esports Entertainment Group, Inc. (formerly VGambling Inc.) (the Company) was incorporated in the state of Nevada on July 22, 2008.
On April 18, 2017, the majority of the shareholders of the Companys common stock voted to approve a change of the name of the Company from VGambling, Inc. to Esports Entertainment Group, Inc.
The Companys activities are subject to significant risks and uncertainties, including failing to obtain the licenses required to operate its gambling business, failing to secure the additional funding required to fully operationalize the Companys business, and the risk of existing or future competitors offering similar or more advanced technology.
The Company is in the development stage and has not yet realized profitable operations and has relied on non-operational sources to fund operations. The Company has incurred recurring losses and additional future losses are anticipated as the Company has not yet been able to generate revenue.
These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize it assets and discharge its liabilities in the normal course of business. As at June 30, 2018, the Company had an accumulated deficit of $3,802,822 and working capital of $112,728. The Company has not generated any revenues during the period ended June 30, 2018. The Company is licensed to conduct online gambling. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations.
These factors raise substantial doubt regarding the Companys ability to continue as a going concern. Managements evaluations are based on relevant conditions and events that are known and reasonably to be knowable as of October 12, 2018. Based on the following, management believes that it is probable that management will be unable to meet its obligations as they come due within one year that the financial statements are issued.
These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Such adjustments could be material.
2.
Presentation of Financial Statements
Basis of Presentation
The financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (US GAAP). All adjustments considered necessary for a fair presentation of financial position, results of operations and cash flows as of June 30, 2018 have been included.
The Companys financial statements are prepared using the accrual basis of accounting in accordance and the Companys functional and reporting currency is the U.S. dollar.
Use of Estimates and Assumptions
The preparation of the financial statements in accordance with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual amounts could materially differ from these estimates. The significant areas requiring the use of management estimates are related to provision for doubtful accounts, accrued liabilities, contingencies, the valuation of deferred taxes, stock based compensation, warrants, convertible debt and intangible assets. Although
these estimates are based on managements knowledge of current events and actions management may undertake in the future, actual results may ultimately differ materially from those estimates.
3.
Summary of Significant Accounting Policies
Consolidation
The consolidated statements include the accounts of the Company and its wholly owned subsidiaries Esports Services Antigua Ltd., Vie Esports Services B.V., Esport Services (Malta) Limited and Esports Entertainment (Malta) Ltd. All material intercompany transactions and balances have been eliminated on consolidation.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, and all highly liquid debt instruments purchased with an original maturity of three months or less. As at June 30, 2018 and 2017 there were no cash equivalents.
Prepaid Expenses
Prepaid expenses consist of services paid, for which the Company has not yet received the benefit.
Equipment
Equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost can be measured reliably. The carrying amount of an asset is derecognized when replaced.
Repairs and maintenance costs are charged to the statements of operations, during the year in which they are incurred.
Depreciation is provided for over the estimated useful life of the asset as follows:
Furniture and Equipment
5 years
Computer Equipment
3 years
Useful lives and residual values are reviewed and adjusted, if appropriate, at the end of each reporting period. An assets carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its estimated recoverable amount. The cost and accumulated depreciation of assets retired or sold are removed from the respective accounts and any gain or loss is recognized in operations.
Intangible Assets
Intangible assets are comprised of online gaming website development costs and software are capitalized and amortized over an estimated useful life of 3 years. Costs related to the design or maintenance of internal-use software and website development are expensed as incurred.
Impairment of Long-Lived Assets
The Company reviews its long-lived assets for impairment whenever events and circumstances indicate that the carrying value of an asset might not be recoverable. An impairment loss, measured as the amount by which the carrying amount exceeds the fair value, is recognized if the carrying amount exceeds estimated undiscounted future cash flows.
Income Taxes
The Company accounts for income taxes under ASC 740 "Income Taxes," which codified SFAS 109, "Accounting for Income Taxes" and FIN 48 Accounting for Uncertainty in Income Taxes an Interpretation of FASB Statement No. 109. Under the asset and liability method of ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period the enactment occurs. A valuation allowance is provided for certain deferred tax assets if it is more likely than not that the Company will not realize tax assets through future operations.
FASB issued ASC 740-10 Accounting for Uncertainty in Income Taxes. ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an enterprises financial statements. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements.
Fair Value of Financial Instruments
ASC 820 Fair Value Measurement defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles and enhances disclosures about fair value measurements. Fair value is defined under ASC 820 as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value under ASC 820 must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value as follows:
Level 1 unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 inputs other than quoted prices that are observable for the asset or liability or indirectly; and
Level 3 inputs that are not based on observable market data.
The carrying amounts of the Companys financial instruments including cash, amounts receivable, accounts payable, accrued liabilities, and due to shareholder approximate their fair values due to their short-term nature.
Loss per Share
Basic loss per share is calculated by dividing the net loss available to common shareholders by the weighted average number of common shares outstanding during the year. Diluted loss per share is calculated using the treasury stock method and reflects the potential dilution of securities by including stock options, warrants and contingently issuable shares, if any, in the weighted average number of common shares outstanding for a year, if dilutive. In a loss year, dilutive common shares are excluded from the loss per share calculation as the effect would be anti-dilutive. Accordingly, for the years ended June 30, 2018 and 2017, the basic loss per share was equal to diluted loss per share as there were no dilutive securities.
Foreign Currency Translation
Monetary assets and liabilities are translated into Canadian dollars, which is the functional currency of the Company, at the year-end exchange rate, while foreign currency expenses are translated at the exchange rate in effect on the date of the transaction. The resultant gains or losses are included in the statement of operations. Non-monetary items are translated at historical rates.
Stock-based Compensation
ASC 718 Compensation - Stock Compensation, prescribes accounting and reporting standards for all share-based payment transactions in which employee services are acquired. Transactions include incurring liabilities, or issuing or offering to issue shares, options and other equity instruments such as employee stock ownership plans and stock appreciation rights. Share-based payments to employees, including grants of employee stock options, are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award, known as the requisite service period (usually the vesting period), on a graded vesting basis.
The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of ASC 505-50 Equity - Based Payments to Non-Employees. Measurement of share-based payment transactions with non-employees is based on the fair value of whichever is more reliably measurable: (a) the goods or services received; or (b) the equity instruments issued. The fair value of the share-based payment transaction is determined at the earlier of performance commitment date or performance completion date.
The estimated fair value of the options and warrants that are ultimately expected to vest based on performance related conditions, as well as the options and warrants that are expected to vest based on future service, is recorded over the instruments requisite service period and charged to stock-based compensation. In determining the amount
of options and warrants that are expected to vest, the Company takes into account, voluntary termination behavior as well as trends of actual option and warrant forfeitures.
Beneficial Conversion Feature
From time to time, the Company may issue convertible notes that may contain an imbedded beneficial conversion feature. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the remaining unallocated proceeds of the note after first considering the allocation of a portion of the note proceeds to the fair value of the warrants, if related warrants have been granted. The intrinsic value of the beneficial conversion feature is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest expense over the life of the note using the effective interest method.
Recent Accounting Pronouncements
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements.
ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes was issued to simplify the classification of deferred taxes on the balance sheet. The new guidance would require that deferred taxes be classified as non-current assets and liabilities based on the tax paying jurisdiction. Application of the standard, which can be applied prospectively or retrospectively, is required for fiscal years beginning on or after December 15, 2016 and for interim periods within that year. The adoption of the amended guidance did not have a material impact on the Companys financial statements.
ASU No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The ASU includes multiple provisions intended to simplify various aspects of the accounting for share-based payments. The areas of simplification in the update involve several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows, however, some of the areas for simplification apply only to non-public entities. This guidance is effective for The guidance did not have a material impact on the Companys financial statements.
The following are new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
ASU No. 2016-02, Leases (Topic 842), On February 25, 2016, the FASB issued a new standard which requires lessees to recognize almost all leases on their balance sheet as a right-of-use asset and a lease liability. The new guidance will require the asset and liability to be initially measured at the present value of the lease payments in the statement of financial position. The new guidance will also require the company to recognize interest expense on the lease liability separately from the amortization of the right-use-asset for finance leases and recognize a single lease cost allocated on a straight-line basis over the lease term for operating leases, in the statement of comprehensive income. The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years with early application permitted. The Company is currently evaluating this guidance to determine the impact it may have on the Companys financial statements.
ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The ASU provides clarity to preparers on the treatment of eight specific items within an entitys statement of cash flows. The guidance becomes effective for all public entities in fiscal years beginning after December 15, 2017, including interim periods therein. Early adoption of the guidance, including within an interim period, is permitted. The Company is currently evaluating this guidance to determine the impact it may have on the Companys financial statements.
ASU No. 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting. The ASU amends the scope of modification accounting for share-based arrangements and provides guidance on the types of changes to the terms or conditions of share-based payment awards to which an entity would be required to apply modification accounting under ASC 718. The guidance becomes effective for annual reporting periods, including interim periods within those annual reporting periods, beginning after December 15, 2017. Early adoption is
permitted, including adoption in any interim period. The Company is currently evaluating this guidance to determine the impact it may have on the Companys financial statements.
In March 2018, FASB issued ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. ASU 2018-05 amends SEC paragraphs in ASC 740 to reflect SEC Staff Accounting Bulletin (SAB) No.118. When the 2017 Tax Cuts and Jobs Act (the "Act") was signed into law, the SEC staff released SAB 118 for applying Topic 740 as it relates to the Act. SAB 118 outlines the approach companies may take if they determine that the necessary information is not available (in reasonable detail) to evaluate, compute, and prepare accounting entries to recognize the effect(s) of the Act by the time the financial statements are required to be filed. Companies may use this approach when the timely determination of some or all of the income tax effect(s) from the Act is incomplete by the due date of the financial statements. SAB 118 also prescribes disclosures that reporting entities must provide in these circumstances. The amendments to the Accounting Standards Codification became effective upon issuance. The Company is evaluating the effect of adopting this new accounting guidance to determine the impact it may have on the Companys financial statements.
In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other- Internal-Use Software (Subtopic 350-40). This ASU addresses customers accounting for implementation costs incurred in a cloud computing arrangement that is a service contract and also adds certain disclosure requirements related to implementation costs incurred for internal-use software and cloud computing arrangements. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted. The amendments in this ASU can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is evaluating the effect of adopting this new accounting guidance to determine the impact it may have on the Companys financial statements.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820). The ASU eliminates such disclosures as the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy. The ASU adds new disclosure requirements for Level 3 measurements. This ASU is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early adoption permitted for any eliminated or modified disclosures. The Company is evaluating the effect of adopting this new accounting guidance to determine the impact it may have on the Companys financial statements.
In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718). This ASU eliminated most of the differences between accounting guidance for share-based compensation granted to nonemployees and the guidance for share-based compensation granted to employees. The ASU supersedes the guidance for nonemployees and expands the scope of the guidance for employees to include both. This ASU is effective for annual periods beginning after December 15, 2018, and interim periods within those years. The Company is evaluating the effect of adopting this new accounting guidance to determine the impact it may have on the Companys financial statements.
4.
Intangible Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
Accumulated
|
|
|
|
Cost
|
|
|
Depreciation
|
|
|
Cost
|
|
|
Depreciation
|
|
Online gaming website
|
|
$
|
127,133
|
|
|
$
|
3,532
|
|
|
$
|
71,578
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
127,133
|
|
|
$
|
3,532
|
|
|
$
|
71,578
|
|
|
$
|
-
|
|
Net carrying amount
|
|
|
|
|
|
$
|
123,601
|
|
|
|
|
|
|
$
|
71,578
|
|
During the year ended June 30, 2018, the Company recorded total depreciation expense of $3,532. As at June 30, 2017, the online gaming website was still under development and accordingly, no depreciation was recorded during the year ended June 30, 2017.
The Company wrote off online gambling website costs of $22,614 (2017 - $Nil) during the year ended June 30, 2018, as it was determined that the future benefit of those costs was negligible.
5.
Equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
June 30, 2018
|
|
|
June 30, 2017
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
Accumulated
|
|
|
|
Cost
|
|
|
Depreciation
|
|
|
Cost
|
|
|
Depreciation
|
|
Computer equipment
|
|
$
|
14,450
|
|
|
$
|
4,863
|
|
$
|
|
11,805
|
|
|
$
|
328
|
|
Furniture and equipment
|
|
|
20,241
|
|
|
|
4,385
|
|
|
|
20,241
|
|
|
|
337
|
|
Total
|
|
$
|
34,691
|
|
|
|
9,248
|
|
$
|
|
32,046
|
|
|
|
665
|
|
Net carrying amount
|
|
|
|
|
|
$
|
25,443
|
|
|
|
|
|
|
$
|
31,381
|
|
During the year ended June 30, 2018, the Company recorded depreciation expense of $8,583 (2017 - $665).
6.
Accounts Payable
Accounts payable were $248,356 as at June 30, 2018 (2017 - $29,017). Accounts payable are primarily comprised of trade payables of $210,380 (2017 - $29,017) and payroll liabilities of $37,976 (2017 - $Nil).
7.
Related Party Transactions
a) On May 20, 2013, the Company appointed Grant Johnson as President and a Director of the Ccompany. Mr. Johnson is paid $120,000 per year for serving as President. During the year ended June 30, 2018, the Company incurred salary of $120,000 (2017 - $65,000) to the President of the Company. As of June 30, 2018, the Company owed the President $30,975 (2017 - $Nil). As at June 30, 2018, the President had received an advance of $10,000 (2017 - $Nil) towards his next months salary, included in prepaid expense.
b) During the year ended June 30, 2018, the Company incurred rent of $6,000 (2017 - $4,563), charged by the President of the Company. As of June 30, 2018, the Company owed $1,551 (2017 - $1,229) to the President related to rent payments.
c) On January 30, 2015, the Company appointed Chul Woong Alex Lim as a Director of the Company for which he receives annual compensation of $20,000. Mr. Lim left the Company as of October 26, 2016. On March 15, 2018, the Company re-appointed Mr. Lim as a Director of the Company. During the year ended June 30, 2018, the Company paid $8,507 (2017 - $5,000) for directors fees. During the year ended June 30, 2018, the Company issued 20,000 stock options (2017 Nil) to Mr. Lim and recorded stock-based compensation expense of $2,447 (2017 - $Nil). The Company owed $1,667 to Mr. Lim for his directors fees as of June 30, 2018 (2017 - $Nil).
d) On March 9, 2015, the Company appointed Yan Rozum as a Director of the Company for which he receives annual compensation of $20,000. Directors fees for Mr. Rozum for the year ended June 30, 2018 totaled $5,000 (2017 - $20,000). On November 22, 2017, the Company appointed Yan Rozum as Chief Technical Officer (CTO) of the Company for which he receives annual compensation of $75,000. CTO fees for Mr. Rozum for the year ended June 30, 2018 totaled $50,000 (2017 - $Nil). During the year ended June 30, 2018, the Company issued 75,000 stock options (2017 Nil) to Mr. Rozum and recorded stock-based compensation expense of $9,175 (2017 - $Nil). The Company owed $Nil to Mr. Rozum as of June 30, 2018 (2017 - $25,000). The Company issued 80,000 shares on March 1, 2017 and 31,250 shares on June 30, 2017 to Mr. Rozum, valued at $45,000 for directors fees.
e) On October 26, 2016, the Company appointed David Watt as a Director for which he receives annual compensation of $25,000. Directors fees for Mr. Watt for the year ended June 30, 2018 totaled $25,000 (2017 - $25,000). The Company owed $23,059 to Mr. Watt as of June 30, 2018 (2017 - $1,107). During the year ended June 30, 2018, the Company issued 20,000 stock options (2017 Nil) to Mr. Watt and recorded stock-based compensation expense of $2,447 (2017 - $Nil). The Company issued 29,190 shares on June 30, 2017 valued at $12,352 for directors fees. The Company had provided an expense advance of $11,331 to Mr. Watt, which was included in amounts receivable as at June 30, 2018.
f) On December 11,
2017, the Company appointed Michał Kozłowski as Vice President of Finance. Mr. Kozłowski was paid 20,000 Polish Zloty ($5,367) per month before March 15, 2018 and 25,000 Polish Zloty ($6,709) per month after March 15, 2018. The Company owed $Nil to Mr. Kozłowski as of June 30, 2018 (2017 - $Nil).During the year ended June 30, 2018, the Company incurred salary of $43,389 (2017 - $Nil) to the Vice President of
Accounting. During the year ended June 30, 2018, the Company issued 80,000 stock options (2017 Nil) to Mr. Kozlowski and recorded stock-based compensation of $4,670 (2017 - $Nil).
g) During the year ended June 30, 2018,
Swiss Interactive Software GmbH (Swiss)
charged the Company software consulting fees of $71,135 (2017 - $50,000) related to the development of the Companys online gaming website (see Note 4). Mr. Rozum is the controlling shareholder of Swiss and a director and the CTO of the Company. The Company owed $20,000 to Swiss as of June 30, 2018 (2017 - $Nil).
h) During the year ended June 30, 2018,
Ardmore Software SP.Z.O.O. (Ardmore)
charged the Company IT consulting fees of $183,204 (2017 - $Nil) and $16,334 (2017 - $Nil) in rent expense. Mr. Rozum is the controlling shareholder of Ardmore and a director and the CTO of the Company. The Company owed $84,869 to
Ardmore
as of June 30, 2018 (2017 - $Nil).
Amounts payable to related parties as disclosed above, are unsecured, non-interest bearing and due on demand.
Amounts due to shareholder are unsecured, non-interest bearing and due on demand. The shareholder is also a director and officer of the Company.
See also Notes 9 and 16(f).
8.
Convertible Promissory Notes
On June 3, 2016, the Company entered into a convertible promissory note agreement with an arms-length individual whereby the Company has borrowed $60,000. The convertible note was issued at a discount of $5,000 and the Company paid a finders fee of $5,000.
The note was interest bearing at 8% per annum commencing June 3, 2016. If the note was paid off in full within 90 days following the effective date, the interest would be waived. The Company was obligated to repay the principal with any interest by March 3, 2017. In the event of default, additional interest would accrue from the date of the event of default at the rate equal to the lower of 18% per annum or the highest rate permitted by law.
As an investment incentive, the Company issued 427,777 five-year cashless warrants, exercisable at $0.14 per share. The exercisable warrants were cancelled, and the Company settled the warrants with 230,300 common shares.
The Company assessed the terms of the convertible debenture in accordance with 470-20-55,
Debt with Conversion and Other Options
. On issuance, the Company recognized $38,432 for the fair value of the incentive warrants as additional paid-in capital based on the relative fair values of the convertible debenture and the incentive warrants. In addition, the Company assessed whether there was a beneficial conversion feature associated with the convertible debenture and recognized a debt discount of $11,568 for the full fair value of the convertible debenture with a corresponding adjustment to additional paid-in capital. The debt discount was accreted over the term of the debenture. During the year ended June 30, 2017, the Company amortized the debt discount to interest expense. The debt was repaid on June 8, 2017.
9.
Commitments and Contingencies
Management Agreements
On May 20, 2013, the Company appointed Grant Johnson as President and a Director of the Company. Mr. Johnson is paid $120,000 per year for serving as President. In addition, the Company may pay a performance bonus of up to 50% of his base salary. The Company must pay three months salary for terminating the President without cause.
On December 7, 2017, the Company appointed Yan Rozum as Chief Technology Officer of the Company. Mr. Rozum will be paid $75,000 per year before the Companys common stock is listing on the NASDAQ stock exchange, and $120,000 per year after the Companys common stock is listed on the NASDAQ stock exchange. The Company must pay three months
salary for terminating the Chief Technology Officer without cause and an additional one month
s salary for each full year of service.
On December 11,
2017, the Company appointed Michał Kozłowski as Vice President Accounting. Mr. Kozłowski will be paid 25,000 Polish Zloty ($6,664) per month for serving as Vice President Accounting. The Company must
pay three months
salary for terminating the Vice President Accounting without cause and an additional one months salary for each full year of service.
Consultant Agreements
The Company has entered into various consulting agreements with minimum termination commitments totalling $91,000.
On
June 12, 2014, the Company
entered into
a Betting Gaming Platform Software Agreement with Swiss Interactive Software GmbH.
The monthly fees due under the agreement are based on the percentage of total revenues per month ranging from 5.0% to 10.0%. Monthly fees for platform support and maintenance services are set at a minimum of 2,500 Euros ($2,912) and a maximum of 25,000 Euros ($29,120). The Company must provide 30 days notice to terminate the agreement.
On August 1, 2017, the Company entered into a consulting agreement for compensation of $48,000 per year. If the Companys generates revenues exceeding $1,000,000 per month for three consecutive months the base annual salary will increase to $72,000.
Lease Agreements
The Company entered into a five year lease agreement with Polskie Nieruchomości Sp. Z.O.O. to rent office space starting on July 1, 2018 and terminating on November 20, 2022. Minimum payments for successive years are as follows:
|
| |
2019
|
$
|
49,300
|
2020
|
|
49,300
|
2021
|
|
49,300
|
2022
|
|
49,300
|
2023
|
|
20,500
|
|
$
|
217,700
|
The Company entered into a three-year lease agreement with Caribbean Developments (Antigua) Ltd. to rent commercial space starting on May 1, 2017 terminating on April 30, 2020. After the first twelve months, either party can terminate the lease agreement. Minimum payments for successive years are as follows:
|
| |
2019
|
$
|
20,974
|
2020
|
|
17,478
|
|
$
|
38,452
|
Service Agreements
On September 6, 2016, the Company entered into an affiliate marketing agreement for a six month period from launch of the website, www.vie.gg. Affiliate fees under this agreement range from 20% to 40% of monthly revenue. The Company must provide thirty days written notice for termination.
On February 26, 2018, the Company entered into a one year service agreement expiring on March 1, 2019. Minimum monthly commitment of 7,500 Euros ($8,736) of which the Company must pay three months notice if terminated.
Contingency
Boustead Securities, LLC (Boustead) has notified the Company that it owes Boustead $192,664, as well as warrants to purchase 1,417,909 common shares of the Company, as compensation for their acting as the placement agent for the sale of Company securities between June 2017 and 2018. Unless this matter is settled, Boustead has notified us that they plan to file an arbitration claim to resolve this dispute. Management believes this claim to be without merit as it is managements position that Boustead has been paid in full for the services provided and that no further cash or warrants are owed.
10.
Common Stock
Issued
a) On September 21, 2016, the Company issued 200,000 units at $0.15 per unit. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before December 1, 2019.
b) On November 30, 2016, the Company issued 66,680 units at $0.15 per unit. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before December 31, 2019.
c) On December 31, 2016, the Company issued 550,000 common shares at $0.25 per share for consulting services in the amount of $137,500. The shares were valued at the quoted market vale at the time of issue.
d) On February 21, 2017, the Company issued 100,000 units at $0.15 per unit. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before February 28, 2020.
e) On March 1, 2017, the Company issued 100,000 common shares at $0.25 per share for director fees. The shares were valued at the quoted market vale at the time of issue.
f) On March 8, 2017, the Company issued 360,000 units at $0.15 per unit. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March 8, 2022.
g) On March 31, 2017, the Company issued 4,136,667 units at $0.15 per unit. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one
common share at $0.15. The warrants are exercisable before March 31, 2020. The warrants are callable by the Company any time after 12 months from the date the equity investment was completed with 30 days notice at a price of $0.05 per warrant.
h) On April 1, 2017, the Company issued 400,000 common shares at $0.15 per share for investor relations services. The shares were valued at the quoted market vale at the time of issue.
i) On April 1, 2017, the Company issued 2,896,857 units at $0.15 per unit. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before April 1, 2020.
The Company did not receive the $30,000 until July 2017. Accordingly, this amount was reflected as subscription receivable within equity as at June 30, 2017.
j) On April 22, 2017, the Company issued 92,000 common shares at $0.25 per share.
The shares were valued at the quoted market vale at the time of issue.
k) On May 16, 2017, the Company issued 600,000 units at $0.25 per unit. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.25. The warrants are exercisable before May 16, 2020. The warrants are callable by the Company any time after November 16, 2018 with 30 days notice at a price of $0.05 per warrant.
l) On May 24, 2017, the Company issued 250,000 common shares at $0.25 per share to a consultant as a finders fee.
m) On June 30, 2017, the Company issued 40,440 common shares at $0.80 per share for director fees. The shares were valued at the quoted market vale at the time of issue.
n) On July 5, 2017, the Company issued 800,000 units at $0.25 per unit for cash proceeds of $200,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at
$0.25. The warrants are exercisable before July 5, 2020. The warrants are callable by the Company any time after July 5, 2018 with 30 days notice at a price of $0.05 per warrant.
o) On July 6, 2017, the Company issued 400,000 units at $0.25 per unit for cash proceeds of $100,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.25. The warrants are exercisable before July 6, 2020. The warrants are callable by the Company any time after July 6, 2018 with 30 days notice at a price of $0.05 per warrant.
p)
On July 16, 2017, the Company issued 100,000 units at $0.25 per unit for cash proceeds of $25,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.25. The warrants are exercisable before July 16, 2020. The warrants are callable by the Company any time after July 16, 2018 with 30 days notice at a price of $0.05 per warrant.
q) On July 17, 2017, the Company issued 290,000 units at $0.25 per unit for cash proceeds of $72,500. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.25. The warrants are exercisable before July 17, 2020. The warrants are callable by the Company any time after July 17, 2018 with 30 days notice at a price of $0.05 per warrant.
r) On July 19, 2017, the Company issued 200,000 units at $0.15 per unit to an arms length consultant in exchange for services of $30,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before July 19, 2020. The warrants are callable by the Company any time after July 19, 2018 with 30 days notice at a price of $0.05 per warrant.
s) On July 20, 2017, the Company issued 100,000 units at $0.25 per unit for cash proceeds of $25,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.25. The warrants are exercisable before July 19, 2020. The warrants are callable by the issuer any time after July 20, 2018 with 30 days notice at a price of $0.05 per warrant.
t) On July 24, 2017, the Company issued 5,000 units at $0.50 per unit for cash proceeds of $2,500. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $2.00. The warrants are exercisable before July 24, 2018.
u) On August 8, 2017, the Company issued 10,000 units at $1.25 per unit for cash proceeds of $12,500. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $2.00. The warrants are exercisable before February 8, 2019.
v) On August 27, 2017, the Company issued 300,000 common shares at $0.25 per share for cash proceeds of $75,000.
w) On September 7, 2017, the Company issued 20,000 units at $1.25 per unit for cash proceeds of $25,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $4.00. The warrants are exercisable before March 6, 2019.
x) On September 21, 2017, the Company issued 156,667 common shares upon the exercise of 166,667 warrants exercised at $0.15 on a cashless basis. 10,000 common shares were held back by the Company as consideration for the exercise.
y) On September 26, 2017, the Company issued 101,000 common shares at $0.15 per share upon the exercise of 101,000 warrants.
z) On September 27, 2017, the Company issued 44,800 units at $1.25 per unit for cash proceeds of $56,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $4.00. The warrants are exercisable before March 30, 2019.
aa) On September 29, 2017, the Company issued 4,000 units at $1.25 per unit for cash proceeds of $5,000. Each unit consists of one common share, one warrant and one piggyback warrant. Each warrant entitles the holder to purchase one common share at $2.00. Each piggyback warrant entitles the holder to purchase one common share at $4.00.
The warrant is exercisable before September 24, 2018 and the piggyback warrant is exercisable before September 24, 2019.
bb) On September 29, 2017, the Company issued 16,000 units at $1.25 per unit for cash proceeds of $20,000. Each unit consists of one common share, one warrant and one piggyback warrant. Each warrant entitles the holder to purchase one common share at $2.00. Each piggyback warrant entitles the holder to purchase one common share at $4.00. The warrant is exercisable before September 28, 2018 and the piggyback warrant is exercisable before September 28, 2019.
cc) On October 17, 2017, the Company issued 66,667 common shares at $0.15 per share upon the exercise of 66,667 warrants.
dd) On October 31, 2017, the Company issued 315,500 common shares at $0.15 per share upon the exercise of 315,500 warrants.
ee) On November 7, 2017, the Company issued 15,500 common shares at $0.25 per share for cash proceeds of $3,875.
ff) On March 2, 2018, the Company issued 120,000 common shares at $0.75 per share to an arms length consultant for marketing services provided, of which $84,706 was reflected as a prepaid expense at June 30, 2018. The share value was based on the quoted value of the stock at the time of issue.
gg) On April 4, 2018, the Company issued 16,000 common shares at $0.25 per share upon the exercise of 16,000 warrants.
hh) On April 26, 2018, the Company issued 100,000 common shares at $0.20 per share for cash proceeds of $20,000.
ii) On April 26, 2018, the Company issued 166,667 common shares at $0.20 per share for cash proceeds of $33,333.
jj) On May 21, 2018, the Company issued 170,000 common shares at $0.15 per share upon the exercise of 170,000 warrants.
kk) On June 11, 2018, the Company issued 250,000 common shares at $1.00 per share to an arms length consultant for referral services of which, $185,625 was reflected as a prepaid expense at June 30, 2018. The share value was based on the quoted value of the stock at the time of issue.
ll) On June 18, 2018, the Company issued 25,000 common shares at $0.20 per share for cash proceeds of $5,000.
mm) On June 20, 2018, the Company issued 20,000 common shares at $0.80 per share to an arms length consultant for advisory services provided. The share value was based on the quoted value of the stock at the time of issue.
Equity to be Issued
nn) As of June 30, 2018, the Company had received subscription proceeds of $31,000 for shares and $220,602 for warrant exercise with respect to 1,666,667 common shares issued subsequent to June 30, 2018 as a result of warrant exercise at $0.15 per share. See Note 16.
oo) As of June 30, 2018, the Company was committed to issue 150,000 common shares valued at $127,500 based on the quoted value of the stock at the time of the commitment, pursuant to a consulting agreement dated June 19, 2018. These common shares were issued subsequent to June 30, 2018 (Note 16(d)).
Warrants
A summary of the Companys warrant activities is as follows:
|
|
|
|
|
|
|
|
|
|
| |
|
|
Number of Warrants
|
|
Weighted-Average Exercise Weighted Average Exercise Price
|
Weighted Average Weighted Average Remaining Life
|
Intrinsic
value
|
Outstanding, June 30, 2016
|
|
427,777
|
|
$
0.14
|
4.93 years
|
$
111,222
|
Granted
|
|
8,350,205
|
|
0.15
|
|
|
Cancelled
|
|
(94,610)
|
|
0.15
|
|
|
Outstanding, June 30, 2017
|
|
8,683,372
|
|
$
0.15
|
3.67 years
|
$
5,653,393
|
Granted
|
|
2,009,800
|
|
0.43
|
|
|
Exercised
|
|
(825,834)
|
|
0.15
|
|
|
Expired
|
|
(1,000)
|
|
0.25
|
|
|
Outstanding and Exercisable at June 30, 2018
|
|
9,866,338
|
|
$
0.21
|
2.60 years
|
$
6,064,913
|
The intrinsic value of the warrants exercised during the year ended June 30, 2018 was $1,825,730. There were no warrants exercised during the year ended June 30, 2017.
As at June 30, 2018, the following warrants were outstanding:
|
| |
Expiry Date
|
Number of Warrants Issued and Exercisable
|
Weighted Average Exercise Price
$
|
July 2018
|
109,000
|
0.39
|
September 2018
|
16,000
|
2.00
|
February 2018
|
10,000
|
2.00
|
March 2019
|
64,800
|
4.00
|
July 2019
|
4,000
|
4.00
|
September 2019
|
216,000
|
0.44
|
December 2019
|
66,680
|
0.15
|
February 2020
|
683,000
|
0.15
|
March 2020
|
2,113,525
|
0.15
|
June 2020
|
750,000
|
0.17
|
July 2020
|
740,000
|
0.22
|
August 2020
|
900,000
|
0.25
|
March 2022
|
4,000,000
|
0.15
|
May 2022
|
193,333
|
0.15
|
|
9,866,338
|
0.21
|
11.
Stock Options
On August 1, 2017, the Company adopted the 2017 Stock Incentive Plan (the 2017 Plan) whereby incentive stock options issued to employees, officers, and directors of the Company shall not exceed 2,500,000 of which the purchase price of the stock options shall not be less than 100% of the fair market value of the Companys common stock and the period for exercising the stock options not exceed 10 years from the date of grant. The option price per share with respect to each option shall be determined by the committee for non-qualified stock options.
During the year ended June 30, 2018, the Company issued 819,120 stock options to employees, officers and directors of the Company. The stock options are exercisable at $0.70 per share for a period of two to five years, and vest over a period of one to three years from the date of grant.
A summary of the Companys stock option activity is as follows:
|
| |
|
Number of
Options
|
Weighted average exercise price
$
|
|
|
|
Outstanding, June 30, 2016 and 2017
|
-
|
-
|
Granted
|
819,120
|
0.70
|
|
|
|
Outstanding, June 30, 2018
|
819,120
|
0.70
|
As at June 30, 2018, the following options were outstanding:
|
|
| |
Expiry Date
|
Number of Options Issued
|
Number of Options Exercisable
|
Weighted Average Exercise Price
$
|
August 18, 2020
|
50,000
|
-
|
0.70
|
August 1, 2023
|
529,120
|
-
|
0.70
|
May 29, 2020
|
240,000
|
-
|
0.70
|
|
819,120
|
-
|
0.70
|
As at June 30, 2018, the weighted average remaining life of the options was 4 years.
The grant date fair value of the stock options granted was determined using the Black-Scholes option pricing model based on the following assumptions:
| |
Expected Life
|
2-5 years
|
Expected Volatility
|
268 - 289%
|
Risk-Free Rate
|
2.57-2.94%
|
Exercise Price
|
$0.70
|
Expected Dividend Rate
|
0%
|
Stock Price
|
$0.53
|
The Companys computation of expected volatility during the year ended June 30, 2018 is based on historical prices of comparable entities. The Companys computation of expected life is calculated using the contractual life.
During the year ended June 30, 2018, the Company recorded stock-based compensation expense of $79,328 (2017 - $Nil) which has been recorded as stock based compensation in the statements of operations. As of June 30, 2018, there was $347,952 of unrecognized expense related to non-vested stock-based compensation arrangements (2017 - $Nil).
The following table provides the details of the total stock-based payments expense during the years ended June 30, 2018 and 2017:
|
|
|
|
|
|
|
| |
|
|
2018
|
|
|
2017
|
|
Employees and directors stock-based payments
|
|
$
|
79,328
|
|
|
$
|
-
|
|
Non-employee awards
|
|
|
-
|
|
|
|
-
|
|
Total
|
|
$
|
79,328
|
|
|
$
|
-
|
|
12.
Income Taxes
At June 30, 2018 and 2017, deferred tax assets at a tax rate of 35% (2017 35%) consisted of the following:
|
| |
|
2018
$
|
2017
$
|
Deferred tax assets
|
654,000
|
603,000
|
Less: valuation allowance
|
(654,000)
|
(603,000)
|
Net deferred tax asset
|
|
-
|
The deferred tax assets have not been recognized because at this stage of the Companys development, it is not determined that future taxable profits will be available against which the Company can utilize such deferred tax assets. The Company incurred a net operating loss of $2,028,662 (2017 - $837,932) for the year ended June 30, 2018, which will start to expire in 2038 (2017 2037). Tax years 2009 through 2018 remain open to examination by the taxing jurisdictions to which the Company is subject. The Company has not been notified by any taxing jurisdictions of any proposed or planned examination.
13.
Segmented Information
The following table summarizes financial information by geographic segment for the year ended June 30, 2018:
|
|
|
|
| |
|
Antigua
|
Malta
|
Curacao
|
U.S.
|
Total
|
|
$
|
$
|
$
|
$
|
$
|
Net loss
|
663,819
|
102,946
|
25,846
|
1,236,051
|
2,028,662
|
Assets
|
183,650
|
9,639
|
1,153
|
415,243
|
609,685
|
The following table summarizes financial information by geographic segment for the year ended June 30, 2017:
|
|
|
|
| |
|
Antigua
|
Malta
|
Curacao
|
U.S.
|
Total
|
|
$
|
$
|
$
|
$
|
$
|
Net loss
|
204,109
|
Nil
|
Nil
|
633,823
|
837,932
|
Assets
|
663,425
|
Nil
|
Nil
|
95,625
|
759,050
|
14.
General and Administrative Expenses
The following table summarizes general and administrative expenses for the years ended June 30, 2018 and 2017:
|
| |
|
2018
$
|
2017
$
|
Advertising and promotion
|
225,565
|
14,140
|
Wages and benefits
|
187,601
|
87,794
|
Rent and utilities
|
97,366
|
11,678
|
Travel
|
64,648
|
23,462
|
Licensing and filing fees
|
50,235
|
-
|
Office expenses
|
46,777
|
10,337
|
Bank charges
|
12,236
|
4,147
|
Depreciation
|
12,115
|
665
|
Total General and Administrative Expenses
|
696,543
|
152,223
|
15.
Financial Instruments
(a) Liquidity risk
Liquidity risk is the risk that the Company will not have sufficient cash resources to meet its financial obligations as they come due. The Companys liquidity and operating results may be adversely affected if its access to the capital market is hindered, whether as a result of a downturn in stock market conditions generally or matters specific to the Company. The Company generates cash flow primarily from its financing activities and advances from shareholders. As at June 30, 2018, the Company had cash of $100,167 (2017 - $546,110) to settle current liabilities of $343,567 (2017 - $87,105). All of the Companys financial liabilities have contractual maturities of less than 30 days and are subject to normal trade terms. The Company regularly evaluates its cash position to ensure preservation and security of capital as well as liquidity.
In the normal course of business, management considers various alternatives to ensure that the Company can meet some of its operating cash flow requirements through financing activities, such as private placements of common stock, offerings of debt and convertible debt instruments as well as through merger or acquisition opportunities. Management may also consider strategic alternatives, including strategic investments and divestitures. As future operations may be financed out of funds generated from financing activities, the ability to do so is dependent on, among other factors, the overall state of capital markets and investor appetite for investments in the esports industry and the Companys securities in particular. Should the Company elect to satisfy its cash commitments through the issuance of securities, by way of either private placement or public offering or otherwise, there can be no assurance that the efforts to obtain such additional funding will be successful, or achieved on terms favorable to the Company or its existing shareholders. If adequate funds are not available on favorable terms, the Company may have to reduce substantially or eliminate expenditures or obtain funds through other sources such as divestiture or monetization of certain assets or sublicensing (where permitted) of certain rights to certain of the Companys technologies or products.
(b) Concentration of credit risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Cash deposits with a chartered bank in Antigua are uninsured. Cash deposits with a major U.S. chartered bank are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. As at June 30, 2018, the Company held $19,217 (2017 - $546,110) with an Antigua chartered bank, and $80,950 (2017 - $Nil) with a U.S. chartered bank through a trust account with the Companys legal counsel.
(c) Foreign exchange risk
The Company principally operates within Antigua, Malta and the U.S. The Companys functional currency is the U.S. dollar and major purchases are transacted in U.S. dollars. Management believes the foreign exchange risk derived from currency conversions is negligible and therefore does not hedge its foreign exchange risk.
(d) Interest rate risk
As at June 30, 2018, the Company does not have any non-fixed interest-bearing debt.
16.
Subsequent Events
a) On July 26, 2018, the Company issued 360,000 common shares at $0.15 per share upon the exercise of 360,000 warrants. As of June 30, 2018, 193,333 of the warrants exercised had been reflected as shares to be issued. See Note 10(nn).
b) On July 26, 2018, the Company issued 15,000 common shares to a consultant for advisory services provided.
c) On July 26, 2018, the Company issued 206,667 common shares at $0.15 per share. As of June 30, 2018, this had been reflected as shares to be issued. See Note 10(nn).
d) On July 31, 2018, the Company issued 150,000 common shares to a consultant for advisory services pursuant to an agreement dated June 19, 2018. As of June 30, 2018, this had been reflected as shares to be issued. See Note 10(oo).
e) On August 3, 2018, the Company issued 333,333 common shares at $0.15 per share upon the exercise of 333,333 warrants.
f) On August 13, 2018, the Company signed a promissory note with a shareholder, for principal of $50,000 bearing interest at 2% per month repayable by September 30, 2018. As a result of failure to repay the note by September 30, 2018, interest increased to 5% per month.
g) On August 16, 2018, the Company issued 1,566,667 common shares at $0.15 per share upon the exercise of 1,566,667 warrants. As of June 30, 2018, 1,266,667 of the warrants exercised had been reflected as shares to be issued. See Note 10(nn).
h) On August 27, 2018, the Company issued 100,000 common shares at $0.15 per share for exercise of warrants.
i) On September 5, 2018, the Company issued 66,667 common shares at $0.15 per share upon the exercise of 66,667 warrants.
j) On September 6, 2018, the Company issued 300,000 common shares at $0.25 per share upon the exercise of 300,000 warrants.
k) On September 6, 2018, the Company issued 200,000 common shares at $0.15 per share upon the exercise of 200,000 warrants.
l) On September 24, 2018, the Company entered into an agreement to issue senior secured convertible promissory notes bearing interest at 5% per annum (the Notes). The Notes, with a principal value of $2,200,000, would be purchased at a 10% discount for $2,000,000 and mature 12 months from the closing date. As at October 12, 2018, these Notes had not been issued.
If the Company defaults, the holders would have the right to be paid 130% of the outstanding principal balance and accrued interest immediately due prior to such event of default. Following an event of default, interest would accrue at rate of 1.5% per month until paid.
The Notes may be prepaid at any time in an amount equal to 110% of the outstanding principal and accrued interest for the first 180 days and 125% of the outstanding principal and accrued interest for days 181-365 days after issuance. In order to prepay the Notes, the Company must give at least 20 trading days written notice to the Investors, during which time the holders may convert the Notes in whole or in part.
The holder of the Note would be entitled at any time after the requisite 144 holding period, to convert all or any amount of the principal face amount of the Notes then outstanding into common shares at a price of $0.60 per share. In the event of default, the conversion price would be equal to 80% of the lowest trading price of the common stock as reported on the OTCQB or other principal market where the Company's common stock is traded for the twenty prior trading days.
100% warrant coverage would be exercisable for a period of 3 years post issuance at an exercise price of $0.75 per share. The warrants would contain a cashless exercise provision if not covered by a registration statement. The Company may call the warrants if the stock trades at $1.25 for a period of 10 straight trading days and are covered by an effective registration statement and the average daily volume of the common stock for the previous 10 trading days must be greater than $75,000. The Company would pay legal fees at the closing of up to $20,000.
m) On October 4, 2018, the Company issued 15,000 common shares to a consultant for advisory services pursuant to an agreement dated June 15, 2018.
n) On October 12, 2018, the Company issued 100,000 shares to a consultant for advisory services pursuant to an agreement dated September 15, 2018.
o) On October 12, 2018, the Company cancelled 120,000 options that were granted during the year ended June 30, 2018 to a consultant of the Company.
p) Subsequent to June 30, 2018, 25,000 warrants exercisable at $2.00 and 100,000 warrants exercisable at $0.25 expired, unexercised.
_________________ Units
Esports Entertainment Group, Inc.
____________________________________
PROSPECTUS
____________________________________
Joseph Gunnar & Co.
LLC
|
|
Dinosaur
Financial
Group
, LLC.
|
[ ], 2019
Through and including , 2019 (the 25
th
day after the date of this offering), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses, other than underwriting discounts and commissions, to be paid by the Registrant in connection with the issuance and distribution of the common stock and warrants being registered. All amounts other than the SEC registration fees and FINRA fees are estimates.
SEC Registration Fees
|
|
$
|
|
FINRA Fees
|
|
|
*
|
NASDAQ Capital Markets Listing Fee
|
|
|
[•]*
|
Printing and Engraving Expenses
|
|
|
[•]*
|
Legal Fees and Expenses
|
|
|
[•]*
|
Accounting Fees and Expenses
|
|
|
[•]*
|
Transfer Agent Fees
|
|
|
[•]*
|
Miscellaneous
|
|
|
[•]*
|
Total
|
|
$
|
[•]
|
Item 14. Indemnification of Officers and Directors
Nevada Law
The Nevada Revised Statutes limits or eliminates the personal liability of directors to corporations and their stockholders for monetary damages for breaches of directors’ fiduciary duties as directors. Our Amended and Restated Bylaws include provisions that require the company to indemnify our directors or officers against monetary damages for actions taken as a director or officer of our Company. We are also expressly authorized to carry directors’ and officers’ insurance to protect our directors, officers, employees and agents for certain liabilities. Our Amended and Restated Articles of Incorporation do not contain any limiting language regarding director immunity from liability.
The limitation of liability and indemnification provisions under the Nevada Revised Statutes and our Amended and Restated Bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duties. These provisions may also have the effect of reducing the likelihood of derivative litigation against directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. However, these provisions do not limit or eliminate our rights, or those of any stockholder, to seek non
-monetary
relief such as injunction or rescission in the event of a breach of a director’s fiduciary duties. Moreover, the provisions do not alter the liability of directors under the federal securities laws. In addition, your investment may be adversely affected to the extent that, in a class action or direct suit, we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions.
Item 15. Recent Sales of Unregistered Securities.
The following sets forth information regarding all unregistered securities sold by us in transactions that were exempt from the requirements of the Securities Act in the last three years. Except where noted, all of the securities discussed in this Item 15 were all issued in reliance on the exemption under Section 4(a)(2) of the Securities Act.
On March
31, 2016, the company issued 233,333 units to Brian Partlow at $0.15 per unit for cash proceeds of $35,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.25. The warrants are exercisable before March
31, 2017.
On March
29, 2016 the company issued 33,333 units to Dan Wolf at $0.15 per unit for cash proceeds of $ 5,000. Each unit consists of one common share and 1/2 warrant. Each warrant entitles the holder to purchase each common share at $0.25. The warrants are exercisable before March
29, 2017.
II-1
On April
14, 2016 the company issued 100,000
shares of common stock to Chul Woong (Alex) Lim at $0.20 for Director Services.
On April
14, 2016 the company issued 100,000
shares of common stock to Yan Rozum at $0.20 for Director Services.
On April
14, 2016 the company issued 60,000
shares of common stock to Matt Partlow at $0.10 per share.
On June
30, 2016, the Company issued 466,680
shares of common stock to Matt Partlow, Zhiyi Qian, Galen Weiss at $0.15 per share, for cash proceeds of $70,000.
On September
21, 2016, the Company issued 200,000 units to Chatterquest LLC at $0.15 per unit for cash proceeds of $30,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before December
1, 2019.
On November
30, 2016, the Company issued 66,680 units to Galen Weiss at $0.15 per unit for cash proceeds of $10,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before December
31, 2019.
On December
31, 2016, the Company issued 550,000
shares of common stock to Matt Partlow at $0.25 per share for services in the amount of $137,500.
On February
21, 2017, the Company issued 100,000 units to Dominic Joseph Bortolussi Corp at $0.15 per unit for cash proceeds of .$15,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before February
28, 2020.
On March
1, 2017 the company issued 100,000
shares of common stock at $0.25 per share to Yan Rozum and Alex Lim for director fees.
On March
31, 2017 the company issued 66,667 units to Laura Defilla at $0.15 per unit for cash proceeds of $10,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020
On March
31, 2017 the company issued 166,666 units to Nick Zarafontis at $0.15 per unit for cash proceeds of $25,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020
On March
31, 2017 the company issued 250,000 units to Patrick Chan at $0.15 per unit for cash proceeds of $37,500. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On March
31, 2017 the company issued 100,000 units to Panagiota Karamitos at $0.15 per unit for cash proceeds of $15,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On March
31, 2017 the company issued 100,000 units to George Karamitos at $0.15 per unit for cash proceeds of $15,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On March
31, 2017 the company issued 100,000 units to Alex Leiter at $0.15 per unit for cash proceeds of $15,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On March
31, 2017 the company issued 100,000 units to Paul Reah at $0.15 per unit for cash proceeds of $15,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On March
31, 2017 the company issued 100,000 units to Mike Longo at $0.15 per unit for cash proceeds of $15,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
II-2
On March
31, 2017 the company issued 170,000 units to Mika Investment Holdings Ltd at $0.15 per unit for cash proceeds of $25,500. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On March
31, 2017 the company issued 66,667 units to Donald Radley at $0.15 per unit for cash proceeds of $10,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On March
31, 2017 the company issued 100,000 units to Kostas Karantzoulis at $0.15 per unit for cash proceeds of $15,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On March
31, 2017 the company issued 1,666,667 units to VG
-SPV
LLC at $0.15 per unit for cash proceeds of $250,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On March
31, 2017 the company issued 333,333 units to Raymond Chan at $0.15 per unit for cash proceeds of $50,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On March
31, 2017 the company issued 100,000 units to Nicholas Bargis at $0.15 per unit for cash proceeds of $15,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On March
31, 2017 the company issued 100,000 units to Mark DiPoce at $0.15 per unit for cash proceeds of $15,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On March
31, 2017 the company issued 200,000 units to 229060 Ontario Inc. at $0.15 per unit for cash proceeds of $30,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On March
31, 2017 the company issued 200,000 units to Ryan Brown at $0.15 per unit for cash proceeds of $30,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On March
31, 2017 the company issued 263,524 units to Amelia Chan at $0.15 per unit for cash proceeds of $39528. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On March
31, 2017 the company issued 100,000 units to Rick Carnevale at $0.15 per unit for cash proceeds of $15,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On March
31, 2017 the company issued 250,000 units to Patrick Chan at $0.15 per unit for cash proceeds of $37,500. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On March
31, 2017 the company issued 100,000 units to Gus Anthos at $0.15 per unit for cash proceeds of $15,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On March
31, 2017 the Company issued 4,136,667 units at $0.15 per unit to VG SPV LLC, Galen Weiss and Tim Caveley for cash proceeds of $620,500. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before March
31, 2020.
On April
1, 2017, the Company issued 400,000
shares of common stock to Agoracom Investor Relations Inc. at $0.15 per share for investor relations services.
On April
22, 2017, the Company issued 92,000
shares of common stock to Darrell Tibbitts, Gary Bickford, and Rick Brown at $0.25 per share for cash proceeds of $23,000.
II-3
On May
16, 2017, the Company issued 2,333,333 units at $0.15 per unit to VG
-SPV
LLC for cash proceeds of $35,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before May
16, 2022.
On May
16, 2017, the Company issued 600,000 units to Romper Securities Inc. at $0.25 per unit for cash proceeds of $150,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.25. The warrants are exercisable before May
16, 2020. The warrants are callable by the Company any time after November
16, 2018 with 30 days notice at a price of $0.05 per warrant.
On May
24, 2017, the Company issued 250,000
shares of common stock to VG
-SPV
LLC at $0.25 per share for services in the amount of $62,500.
On May
31, 2017 the Company issued 230,300 units to Tangiers Global LLC at $0.25 per settlement of Loan Agreement with the Corporation.
On June
30, 2017 the company issued 40,440 units to Yan Rozum and David Watt at $0.80 per share for Directors Services.
On June
30, 2017 the company issued 150,000 units to Terry Huber at $0.25 per unit for cash proceeds of $37,500. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.25. The warrants are exercisable before June
30, 2020
On July
5, 2017, the Company issued 800,000 units to Sheldon Inwentash at $0.25 per unit for cash proceeds of $200,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.25. The warrants are exercisable before July
5, 2020. The warrants are callable by the Company any time after July
5, 2018 with 30 days notice at a price of $0.05 per warrant.
On July
6, 2017, the Company issued 400,000 units to Chi Chang Lin at $0.25 per unit for cash proceeds of $100,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.25. The warrants are exercisable before July
6, 2020. The warrants are callable by the Company any time after July
6, 2018 with 30 days notice at a price of $0.05 per warrant.
On July
16, 2017, the Company issued 100,000 units to 1313366 Ontario Ltd. at $0.25 per unit for cash proceeds of $25,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.25. The warrants are exercisable before July
16, 2020. The warrants are callable by the Company any time after July
16, 2018 with 30 days notice at a price of $0.05 per warrant.
On July
19, 2017, the Company issued 200,000 units to George Tsiolis at $0.15 per unit in exchange for services of $30,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.15. The warrants are exercisable before July
19, 2020. The warrants are callable by the Company any time after July
19, 2018 with 30 days notice at a price of $0.05 per warrant.
On July
20, 2017, the Company issued 100,000 units to George Tsiolis at $0.25 per unit for cash proceeds of $25,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.25. The warrants are exercisable before July
19, 2020. The warrants are callable by the issuer any time after July
20, 2018 with 30 days notice at a price of $0.05 per warrant.
On July
24, 2017, the Company issued 5,000 units to Rob Lowe at $0.50 per unit for cash proceeds of $2,500. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $2.00. The warrants are exercisable before July
24, 2018.
On July
25, 2017, the Company issued 100,000 units to 1313366 Ontario Ltd. at $0.25 per unit for cash proceeds of $25.000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.25. The warrants are exercisable before July
25, 2020.
On August
8, 2017, the Company issued 10,000 units to Nutjru Meethubtim at $1.25 per unit for cash proceeds of $12,500. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $2.00. The warrants are exercisable before February
8, 2019.
II-4
On August
14, 2017, the Company issued 100.000 units to Michael Khalil at $0.25 per unit for cash proceeds of $25,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.25. The warrants are exercisable before August
14, 2020.
On August
27, 2017, the Company issued 300,000
shares of common stock to Matt Partlow at $0.25 per share for cash proceeds of $75,000.
On September
7, 2017, the Company issued 20,000 units to George Benbassat at $1.25 per unit for cash proceeds of $25,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $4.00. The warrants are exercisable before March
6, 2019.
On September
21, 2017, the Company issued 156,667
shares of common stock to Boustead Securities LLC upon the exercise of 166,667 warrants exercised at $0.15 on a cashless basis. 10,000
shares of common stock were held back by the Company as consideration for the exercise.
On September
26, 2017, the Company issued 101,000
shares of common stock to Raymond Chan and Paul Reah at $0.15 per share upon the exercise of 101,000 warrants for cash proceeds of $15,150.
On September
27, 2017, the Company issued 44,800 units to Chan Lee Family Holdings Inc. at $1.25 per unit for cash proceeds of $56,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $4.00. The warrants are exercisable before March
30, 2019.
On September
28, 2017, the Company issued 40,000 units to Lloyd Joseph at $0.25 per unit for cash proceeds of $10,000. Each unit consists of one common share and one warrant. Each warrant entitles the holder to purchase one common share at $0.25. The warrants are exercisable before September
28, 2020.
On September
29, 2017, the Company issued 4,000 units to Rob Lowe at $1.25 per unit for cash proceeds of $5,000. Each unit consists of one common share, one warrant and one piggyback warrant. Each warrant entitles the holder to purchase one common share at $2.00. Each piggyback warrant entitles the holder to purchase one common share at $4.00. The warrant is exercisable before September
24, 2018 and the piggyback warrant is exercisable before September
24, 2019.
On September
29, 2017, the Company issued 16,000 units to James Lowe at $1.25 per unit for cash proceeds of $20,000. Each unit consists of one common share, one warrant and one piggyback warrant. Each warrant entitles the holder to purchase one common share at $2.00. Each piggyback warrant entitles the holder to purchase one common share at $4.00. The warrant is exercisable before September
28, 2018 and the piggyback warrant is exercisable before September
28, 2019.
On October
17, 2017, the Company issued 66,667
shares of common stock to Donald Radley at $0.15 per share upon the exercise of 66,667 warrants for cash proceeds of $10,000.
On October
31, 2017, the Company issued 315,500
shares of common stock to Raymond Chan at $0.15 per share upon the exercise of 315,500 warrants for cash proceeds of $47,325.
On November
7, 2017, the Company issued 15,500
shares of common stock to Gas Investments LLC at $0.25 per share for cash proceeds of $3,875.
On March
2, 2018, the Company issued 120,000
shares of common stock to Agoracom Investor Relations Inc. at $0.75 per share for services, in the amount of $90,000.
On April
4, 2018, the Company issued 16,000
shares of common stock to Dan Wolf at $0.25 per share upon the exercise of 16,000 warrants for cash proceeds of $4,000.
On April
26, 2018, the Company issued 100,000
shares of common stock to Leann Clayton at $0.20 per share for cash proceeds of $20,000.
On April
26, 2018, the Company issued 166,667
shares of common stock to Matt Partlow at $0.20 per share for cash proceeds of $33,333.
On May
21, 2018, the Company issued 170,000
shares of common stock to Mika Investment Holdings Ltd. at $0.15 per share upon the exercise of 170,000 warrants for cash proceeds of $25,500.
II-5
On June
11, 2018, the Company issued 250,000
shares of common stock to Christian Heinrichs at $1.00 per share for referral services in the amount of $185,625.
On June
18, 2018, the Company issued 25,000
shares of common stock to Brian Partlow at $0.20 per share for cash proceeds of $5,000.
On June
20, 2018, the Company issued 20,000
shares of common stock to Uptick Capital LLC at $0.80 per share for services in the amount of $16,000.
As of June
30, 2018, the Company had received subscription proceeds of $31,000 for shares and $220,602 for warrant exercise with respect to 1,666,667
shares of common stock issued subsequent to June
30, 2018 as a result of warrant exercise at $0.15 per share.
As of June
30, 2018, the Company was committed to issue 150,000
shares of common stock valued at $127,500 based on the quoted value of the stock at the time of the commitment, pursuant to a consulting agreement dated June
19, 2018.
On July
26, 2018, the Company issued 15,000
shares of common stock to Uptick Capital LLC for services provided.
On July
26, 2018, the Company issued 206,667
shares of common stock to Boustead Securities LLC at $0.15 per share for cash proceeds of $31,000.
On July
26, 2018 the Company issued 193,667
shares of common stock to Boustead Securities LLC at $0.15 per share for cash proceeds of $29,000.
On July
31, 2018, the Company issued 150,000
shares of common stock to Red Chip Companies Inc. for services provided.
On July
31, 2018 the Company issued 100,000
shares of common stock to Marco DiPoce at $0.15 per share for cash proceeds of $15,000.
On August
3, 2018, the Company issued 333,333
shares of common stock to Raymond Chan and Amelia Chan at $0.15 per share upon the exercise of 333,333 warrants for cash proceeds of $50,000.
On August
16, 2018, the Company issued 1,566,667
shares of common stock to Alex Leiter, VG
-SPV
LLC and Ryan Brown at $0.15 per share upon the exercise of 1,566,667 warrants for cash proceeds of $235,000.
On August
27, 2018, the Company issued 100,000
shares of common stock to Layvaty Corp. at $0.15 per share for exercise of warrants for cash proceeds of $15,000.
On September
5, 2018, the Company issued 66,667
shares of common stock to Tim Calveley at $0.15 per share upon the exercise of 66,667 warrants for cash proceeds of $10,000.
On September
6, 2018, the Company issued 266,667
shares of common stock to Laura DeFilla, Romper Securities Inc., and George Tsiolis at $0.15 per share upon the exercise of 266,667 warrants for cash proceeds of $40,000.
On September
6, 2018, the Company issued 300,000
shares of common stock to Romper Securities Inc at $0.25 per share upon the exercise of 300,000 warrants for cash proceeds of $75,000.
On October
4, 2018, the Company issued 15,000
shares of common stock to Uptick Capital LLC for services.
On October
12, 2018, the Company issued 100,000
shares of common stock to Magnus Leppaniemi for services.
On October
24, 2018 the Company issued 263,525
shares of common stock to Raymond and Amelia Chan at $0.15 per share upon the exercise of 263,525 warrants for cash proceeds of $39,528.
On December
13, 2018 the Company issued 20,000
shares of common stock to Julian Goffin at $0.80 per share for services.
On February
13, 2019 the Company issued 100,000
shares of common stock to Christopher Malone at $0.60 per share for services.
II-6
Item 16. Exhibits and Financial Statement Schedules
The following exhibits are filed with this Registration Statement:
Exhibit Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
|
Filed or Furnished
|
Form
|
|
Exhibit
|
|
Filing Date
|
|
Herewith
|
1.1*
|
|
Form of Underwriting Agreement
|
|
|
|
|
|
|
|
|
3.1
|
|
Amended and Restated Articles of Incorporation
|
|
|
|
|
|
|
|
X
|
3.2
|
|
Amended and Restated Bylaws.
|
|
|
|
|
|
|
|
X
|
4.1*
|
|
Form of Warrant
|
|
|
|
|
|
|
|
|
5.1*
|
|
Opinion of Lucosky Brookman LLP
|
|
|
|
|
|
|
|
|
10.1
|
|
2017 Stock Incentive Plan
|
|
|
|
|
|
|
|
X
|
10.2
|
|
Share Exchange Agreement dated May 20, 2013 between our company, Shawn Erickson, H&H Arizona, Inc., Next Generation Holdings Trust, a Nevis trust, and the Shareholder of H&H Arizona, Inc.
|
|
8-K
|
|
10.1
|
|
08/07/2014
|
|
|
10.3
|
|
Convertible Promissory Note with Tangiers Global, LLC dated June 3, 2016
|
|
8-K
|
|
10.1
|
|
06/21/2016
|
|
|
10.4
|
|
Form of Securities Purchase Agreement
|
|
8-K
|
|
10.1
|
|
11/15/2018
|
|
|
10.5
|
|
Form of Senior Secured Convertible Note
|
|
8-K
|
|
10.2
|
|
11/15/2018
|
|
|
10.6
|
|
Form of Warrant
|
|
8-K
|
|
10.3
|
|
11/15/2018
|
|
|
10.7
|
|
Form of Security Agreement
|
|
8-K
|
|
10.4
|
|
11/15/2018
|
|
|
10.8
|
|
Form of Pledge Agreement
|
|
8-K
|
|
10.5
|
|
11/15/2018
|
|
|
10.9
|
|
Form of Subsidiary Guarantee
|
|
8-K
|
|
10.6
|
|
11/15/2018
|
|
|
10.10**
|
|
Employment Agreement with Grant Johnson
|
|
|
|
|
|
|
|
X
|
10.11**
|
|
Employment Agreement with Yan Rozum
|
|
|
|
|
|
|
|
X
|
10.12**
|
|
Employment Agreement with Christopher Malone
|
|
|
|
|
|
|
|
X
|
10.13
|
|
Lease Agreement with Polskie Nieruchomo
Ś
ci Sp. Z.O.O.
|
|
|
|
|
|
|
|
X
|
10.14*
|
|
Lease Agreement with Caribbean Developments (Antigua) Ltd.
|
|
|
|
|
|
|
|
|
10.15
|
|
Form of Convertible Promissory Note
|
|
|
|
|
|
|
|
|
10.16
|
|
Software Transfer Agreement dated April 7, 2019, by and between Swiss Interactive Software and the Company
|
|
|
|
|
|
|
|
X
|
14.1
|
|
Code of Ethics
|
|
|
|
|
|
|
|
X
|
21.1
|
|
List of Subsidiaries
|
|
|
|
|
|
|
|
X
|
23.1
|
|
Consent of UHY McGovern Hurley, LLP, Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
X
|
23.2
|
|
Consent of PLS CPA, Independent Registered Public Accounting Firm
|
|
|
|
|
|
|
|
X
|
23.3
|
|
Consent of Lucosky Brookman LLP (included in Exhibit 5.1)
|
|
|
|
|
|
|
|
X
|
24.1
|
|
Power of Attorney (included in signature page)
|
|
|
|
|
|
|
|
X
|
99.1
|
|
Audit Committee Charter
|
|
|
|
|
|
|
|
X
|
99.2
|
|
Compensation Committee Charter
|
|
|
|
|
|
|
|
X
|
99.3
|
|
Nominating Committee Charter
|
|
|
|
|
|
|
|
X
|
II-7
(b) Financial statement schedules.
All schedules have been omitted because either they are not required, are not applicable or the information is otherwise set forth in the financial statements and related notes thereto.
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post
-effective
amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post
-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
(2) That for the purpose of determining any liability under the Securities Act of 1933 each such post
-effective
amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post
-effective
amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
(6) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:
The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
II-8
(iii) The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.
(f) The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
(h) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in Item 14 above, or otherwise, the Registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
(i) The undersigned Registrant hereby undertakes:
(1) That for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4), or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2) That for the purpose of determining any liability under the Securities Act, each post
-effective
amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and this offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.
* Paragraph references correspond to those of Regulation S
-K
, Item 512.
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the city of Toronto, Ontario, on May
1, 2019.
|
|
Esports Entertainment Group, Inc.
|
|
|
|
|
|
|
|
By:
|
|
/s/
Grant Johnson
|
|
|
|
|
Name: Grant Johnson
|
|
|
|
|
Title: Chief Executive Officer
|
|
|
|
|
(Principal Executive Officer)
|
POWER OF ATTORNEY: KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature appears below constitutes and appoints Grant Johnson, his or her true and lawful attorneys
-in-fact
and agents with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments (including post
-effective
amendments) to this Registration Statement, and to sign any registration statement for the same offering covered by the Registration Statement that is to be effective upon filing pursuant to Rule 462(b) promulgated under the Securities Act, and all post
-effective
amendments thereto, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys
-in-fact
and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys
-in-fact
and agents or any of them, or his, her or their substitute or substitutes, may lawfully do or cause to be done or by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:
Signature
|
|
Title
|
|
Date
|
/s/ Grant Johnson
|
|
Chief Executive Officer, Secretary, and
|
|
May
1, 2019
|
Grant Johnson
|
|
Chairman of the Board of Directors
|
|
|
|
|
(Principal Executive Officer)
|
|
|
/s/ Christopher Malone
|
|
Chief Financial Officer
|
|
May
1, 2019
|
Christopher Malone
|
|
(Principal Accounting Officer and
|
|
|
|
|
Principal Financial Officer)
|
|
|
/s/ David Watt
|
|
Director
|
|
May
1, 2019
|
David Watt
|
|
|
|
|
/s/ Yan Rozum
|
|
Director
|
|
May
1, 2019
|
Yan Rozum
|
|
|
|
|
/s/ Chul Woong Lim
|
|
Director
|
|
May
1, 2019
|
Chul Woong Lim
|
|
|
|
|
/s/Alan Alden
|
|
Director
|
|
May
1, 2019
|
Alan Alden
|
|
|
|
|
II-10