Filed
Pursuant to Rule 424(b)(5)
Registration
No. 333-252370
PROSPECTUS
SUPPLEMENT
(To
Prospectus dated February 5, 2021)
ESPORTS
ENTERTAINMENT GROUP, INC.
Up
to $20,000,000 of Common Stock
We
have entered into a sales agreement with Maxim Group LLC (“Maxim”) relating to the sale of shares of our common stock offered
by this prospectus supplement and the accompanying prospectus. In accordance with the terms of the sales agreement, we may offer and
sell up to a maximum aggregate amount of $20,000,000 of our common stock, $0.001 par value per share, from time to time through Maxim,
acting as agent.
Our
common stock is traded on The NASDAQ Capital Market under the symbol “GMBL.” The closing price of our common stock on September
2, 2021 was $9.07 per share.
Sales
of our common stock, if any, under this prospectus supplement and the accompanying prospectus will be made by any method permitted that
is deemed an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended, or the Securities
Act, including by means of ordinary brokers’ transactions at market prices, in block transactions or as otherwise agreed by Maxim
and us. Maxim will act as our sales agent using commercially reasonable efforts consistent with its normal trading and sales practices.
There is no arrangement for funds to be received in any escrow, trust or similar arrangement.
Maxim
will be entitled to compensation at a commission rate of 3% of the gross sales price per share sold. The net proceeds to us that we receive
from sales of our common stock will depend on the number of shares actually sold and the offering price for such shares. We are limited
to the sale of not more than $20,000,000 of our common stock pursuant to the sales agreement. Based on the trading price of our common
stock and because there is no minimum offering amount provided for under the engagement agreement the actual proceeds to us will vary.
In
connection with the sale of the common stock on our behalf, Maxim may be deemed to be an “underwriter” within the meaning
of the Securities Act and the compensation of Maxim may be deemed to be underwriting commissions or discounts. We have also agreed to
provide indemnification and contribution to Maxim with respect to certain liabilities, including liabilities under the Securities Act.
Investing
in these securities involves a high degree of risk. Before buying shares of our common stock, you should carefully consider the risk
factors described in “Risk Factors” beginning on page S-15 of this prospectus supplement and in the documents incorporated
by reference into this prospectus supplement and any free writing prospectus that we have authorized for use in connection with this
offering.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities, or determined
if this prospectus supplement and the accompanying prospectus is accurate or complete. Any representation to the contrary is a criminal
offense.
MAXIM
GROUP LLC
The
date of this prospectus supplement is September 3, 2021
TABLE
OF CONTENTS
PROSPECTUS
SUPPLEMENT
PROSPECTUS
ABOUT
THIS PROSPECTUS SUPPLEMENT
This
prospectus supplement and the accompanying base prospectus form part of a registration statement on Form S-3 that we filed with the Securities
and Exchange Commission, which we refer to as the SEC, using a “shelf” registration process. This document contains two parts.
The first part consists of this prospectus supplement, which provides you with specific information about this offering. The second part,
the accompanying base prospectus dated February 5, 2021, provides more general information, some of which may not apply to this offering.
Generally, when we refer only to the “prospectus,” we are referring to both parts combined. This prospectus supplement may
add, update or change information contained in the accompanying base prospectus. To the extent that any statement we make in this prospectus
supplement is inconsistent with statements made in the accompanying base prospectus or any documents incorporated by reference herein
or therein, the statements made in this prospectus supplement will be deemed to modify or supersede those made in the accompanying base
prospectus and such documents incorporated by reference herein and therein.
In
this prospectus supplement, “EEG,” the “Company,” “we,” “us,” “our” and similar
terms refer to Esports Entertainment Group, Inc., a Nevada corporation, and its consolidated subsidiaries. References to our “common
stock” refer to the common stock of Esports Entertainment Group, Inc.
All
references in this prospectus supplement to our consolidated financial statements include, unless the context indicates otherwise, the
related notes.
The
industry and market data and other statistical information contained in the documents we incorporate by reference in the prospectus are
based on management’s own estimates, independent publications, government publications, reports by market research firms or other
published independent sources, and, in each case, are believed by management to be reasonable estimates. Although we believe these sources
are reliable, we have not independently verified the information.
You
should rely only on the information contained in or incorporated by reference in this prospectus supplement, the accompanying base prospectus
and in any free writing prospectus that we have authorized for use in connection with this offering. We have not, and Maxim has not,
authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should
not rely on it. You should assume that the information in this prospectus supplement, the accompanying base prospectus, the documents
incorporated by reference in the accompanying base prospectus, and in any free writing prospectus that we have authorized for use in
connection with this offering, is accurate only as of the date of those respective documents. Our business, financial condition, results
of operations and prospects may have changed since those dates. You should read this prospectus supplement, the accompanying base prospectus,
the documents incorporated by reference in the accompanying base prospectus, and any free writing prospectus that we have authorized
for use in connection with this offering, in their entirety before making an investment decision. You should also read and consider the
information in the documents to which we have referred you in the sections of the accompanying base prospectus entitled “Where
You Can Find More Information” and “Incorporation by Reference of Certain Documents.” We are not, and Maxim is not,
making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus supplement and our SEC filings that are incorporated by reference into this prospectus supplement contain or incorporate by
reference forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements, other than statements of historical
fact, included or incorporated by reference in this prospectus supplement regarding our development of our strategy, future operations,
future financial position, projected costs, prospects, plans and objectives of management are forward-looking statements. Forward-looking
statements may include, but are not limited to, statements about:
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statements of the plans, strategies and objectives of management for future operations;
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any
statements concerning proposed new products, services or developments;
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any
statements regarding future economic conditions or performance;
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our
ability to protect our intellectual property and operate our business without infringing upon the intellectual property rights of
others;
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our
estimates regarding the sufficiency of our cash resources and our need for additional funding; and
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our
intended use of the net proceeds from the offerings of shares of common stock under this prospectus supplement.
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The
words “believe,” “anticipate,” “design,” “estimate,” “plan,” “predict,”
“seek,” “expect,” “intend,” “may,” “could,” “should,” “potential,”
“likely,” “projects,” “continue,” “will,” and “would” and similar expressions
are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Forward-looking
statements reflect our current views with respect to future events, are based on assumptions and are subject to risks and uncertainties.
We cannot guarantee that we actually will achieve the plans, intentions or expectations expressed in our forward-looking statements and
you should not place undue reliance on these statements. There are a number of important factors that could cause our actual results
to differ materially from those indicated or implied by forward-looking statements. These important factors include those discussed under
the heading “Risk Factors” contained or incorporated in this prospectus supplement and the accompanying prospectus and any
free writing prospectus we may authorize for use in connection with a specific offering. These factors and the other cautionary statements
made in this prospectus supplement and the accompanying prospectus should be read as being applicable to all related forward-looking
statements whenever they appear in this prospectus supplement and the accompanying prospectus. Except as required by law, we do not assume
any obligation to update any forward-looking statement. We disclaim any intention or obligation to update or revise any forward-looking
statement, whether as a result of new information, future events or otherwise.
PROSPECTUS
SUPPLEMENT SUMMARY
The
following summary highlights selected information contained in or incorporated by reference into this prospectus and does not contain
all the information that may be important to purchasers of our securities. Before making an investment decision, you should carefully
read the entire prospectus supplement, including the “Risk Factors” section, the accompanying base prospectus and the documents
and other information incorporated by reference into the prospectus.
About
Esports Entertainment Group, Inc.
Overview
Corporate
History
Esports
Entertainment Group, Inc. (“EEG”) was formed in the State of Nevada on July 22, 2008 under its prior name Virtual Closet,
Inc. Virtual Closet, Inc. changed its name to DK Sinopharma, Inc. on June 6, 2010. DK Sinopharma, Inc. changed its name to VGambling,
Inc. on August 12, 2014. On or about April 24, 2017, VGambling, Inc. changed its name to Esports Entertainment Group, Inc. The company
was engaged in a number of different enterprises up until May 20, 2013, when, pursuant to the terms of the Share Exchange Agreement,
they acquired all of the outstanding capital stock of H&H Arizona Corporation in exchange for 3,333,334 shares of its common stock.
From May 2013 until August 2018, its operations were limited to designing, developing and testing its wagering systems. They launched
their online esports wagering website (www.vie.gg) in August 2018.
Business
Overview
EEG
is the competitive playing of video games by amateur and professional teams as a spectator sport. Esports typically takes the form of
organized, multiplayer video games that include genre’s such as real-time strategy, fighting, first-person shooter and multiplayer
online battle arena games. As of June 30, 2021, the three most popular esports games were Dota 2, League of Legends (each multiplayer
online battle arena games) and Counter Strike: Global Offensive (a first-person shooter game). Other popular games include Fortnite,
StarCraft II, Call of Duty¸ Overwatch, Hearthstone and Apex Legends. Most major professional esports events and a wide range of
amateur esports events are broadcast live via streaming services including twitch.tv and youtube.com.
EEG
is an esports focused iGaming and entertainment company with a global footprint. EEG’s strategy is to build and acquire betting
and related platforms, and lever them into the rapidly growing esports vertical. We operate the business in two verticals, EEG iGaming
and EEG Games.
EEG
iGaming:
In
the EEG iGaming vertical, we have a best-in-class esports betting platform with full casino and sportsbook functionality. Our in-house
gambling software platform, Phoenix, is a modern reimagined sportsbook that caters to both millennial esports bettors as well as traditional
sports bettors. Phoenix is being developed through the assets and resources of FLIP Sports Limited, a software development company, that
we acquired in September 2020.
EEG’s
goal is to be a leader in the large and rapidly growing sector of esports real-money wagering, offering fans the ability to wager on
professional esports events in a licensed and secure environment. From February 2021, under the terms of their Maltese Gaming Authority
(MGA) license, we are now able to accept wagers from residents of over 180 jurisdictions including countries within the European Union,
Canada, New Zealand and South Africa, on our ‘‘Vie.bet’’ platform.
Alongside
the Vie.bet esports focused platform, EEG owns and operates:
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Argyll
Entertainment’s flagship Sportnation.bet online sportsbook and casino brand, licensed in the UK and Ireland;
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Lucky
Dino’s 5 online casino brands licensed by the MGA on its in-house built iDefix casino-platform; and
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The
recently acquired Bethard online sportsbook and casino brands, operating under MGA, Spanish, Irish and Swedish licenses.
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On
August 20, 2020, EEG announced entry into a multi-year partnership with Twin River Worldwide Holdings, Inc (NYSE: TRWH), now Bally’s
Corporation (NYSE: BALY), to launch their proprietary mobile sports betting product, ‘‘Vie.gg’, in the state of New
Jersey. EEG intends to have this platform, which was previously licensed in Curacao, live in the state during August 2021 or soon thereafter.
In
total EEG currently holds five Tier-1 gambling licenses (Malta, UK, Ireland, Spain and Sweden) and are in the process of acquiring one
additional gambling license in the United States for the state of New Jersey. Our acquisitions of Argyll Entertainment, Lucky Dino and
Bethard provide a foothold in mature markets in Europe into which we believe we can cross-sell our esports offerings.
EEG
Games:
In
the EEG Games vertical, focus is on providing esports entertainment experiences for every gamer. We do this through a combination of
1) in-person experiences (at Helix Centers), 2) online tournaments (through their recently acquired EGL tournament platform), and 3)
player-vs-player wagering (through their soon-to-be-released LANDuel product). In order to provide exposure for our platforms, we have
signed numerous exclusive marketing relationships with professional sports organizations across the NFL, NBA, NHL and MLS.
Underpinning
our EEG Games vertical is our proprietary infrastructure software, ggCircuit (“GGC”). ggCircuit is the leading provider of
local area network (“LAN”) Center management software, enabling us to seamlessly manage mission critical functions such as
game licensing and payments.
Recent
Developments
Entry
into a Securities Purchase Agreement with Investor
On
May 28, 2021, we entered into a Securities Purchase Agreement (“Purchase Agreement”) with an institutional investor (the
“Investor”) pursuant to which we sold a Senior Convertible Note dated June 2, 2021, with an initial principal amount of $35
million (the “Convertible Note”) in a transaction exempt from registration under Section 4(a)(2) of the Securities Act of
1933, as amended, and Rule 506 of Regulation D promulgated thereunder. The Convertible Note bears interest at a rate of 8% per annum
and matures two years following the date of issuance (the “Maturity Date”, subject to extension in certain circumstances,
including bankruptcy and outstanding events of default). In addition to the principal amount the Company is required to pay an additional
amount equal to 6% of the outstanding principal amount. After the occurrence and during the continuance of an Event of Default (as defined
in the Convertible Note), the Convertible Note will accrue interest at the rate of 12.0% per annum.
The
Convertible Note is convertible, at the option of the holder, into shares of the Company’s common stock at a conversion price of
$17.50 per share. The Convertible Note is subject to a most favored nations provision and standard adjustments in the event of any stock
split, stock dividend, stock combination, recapitalization or other similar transaction. If we enter into any agreement to issue (or
issue) any variable rate securities, the noteholder has the additional right to substitute such variable price (or formula) for the conversion
price.
In
connection with the sale of the Convertible Note, the Company issued two warrants to the Investor, the Series A Warrant and Series B
Warrant. Pursuant to the Series A Warrant, issued by the Company in favor of the Investor, the investor shall have the right to purchase
2,000,000 shares of the Company’s common stock at an exercise price of $17.50 per share. The Series A Warrant expires in 4 years.
The Series A Warrant has a cashless exercise provision provides that no effective registration statement exists and a beneficial ownership
limitation of 4.99% which may be increased or decreased up to 9.99%, provided that any such increase will not be effective until the
61st day after delivery of a notice to us of such increase.
Pursuant
to a Series B Warrant, issued by the Company in favor of the Investor, the investor shall have the right to purchase 2,000,000 shares
of the Company’s common stock at an exercise price of $17.50 per share. The Series B Warrant expires in 2 years. The Series B Warrant
has a cashless exercise provision provides that no effective registration statement exists and a beneficial ownership limitation of 4.99%
which may be increased or decreased up to 9.99%, provided that any such increase will not be effective until the 61st day after delivery
of a notice to us of such increase. The Series B Warrant is only exercisable to the extent that the indebtedness owing under the Convertible
Note is redeemed. For every share of common stock issuable upon conversion of the redemption amount on the Convertible Note, one warrant
share will vest and be eligible for exercise.
On
July 13, 2021, the Purchaser consented to the Pledge entered into with Gameday Group Plc as described under the header below titled “Entry
into a Securities Purchase Agreement with Gameday Group Plc”, waived the provisions of Section 14(c) of the Note prohibiting the
Pledge, and agreed that the lien represented by the Pledge shall constitute a “Permitted Lien” for purposes of Section 31(uu)
of the Note.
Entry
into a Securities Purchase Agreement with Gameday Group Plc
On
May 25, 2021 (the “Signing Date”), we entered into a Share Sale and Purchase Agreement with Gameday Group Plc, a limited
liability company incorporated in Malta (the “Seller”, and together with the Company, the “Parties”). Subject
to the terms and conditions of the Purchase Agreement, the Parties agreed that the Shares (as defined below) will be sold by the Seller
to the Company five Business Days after the issuance of the Seller’s Pre-Closing Restructuring Confirmation (as defined below),
or such other date as the Parties may agree on writing (the “Closing Date”). All defined terms used herein and not otherwise
defined have the meanings set forth in the Purchase Agreement.
According
to the Purchase Agreement, the Seller owns certain business assets (the “Assets”) regarding the Bethard, Fastbet and Betive
brands (the “Business”), including (i) the brand name Bethard (and, together with the Fastbet and Betive brands the “Brands”);
(ii) domains relating to the Brands (the “Domains”); (iii) the customer databases relating to the Brands (the “Customer
Databases”); (iv) website content, materials and code pertaining to the Domains (or any part/s thereof) currently owned by the
Seller and any of its Affiliates (the “Front-End Code”); (v) certain licensee rights under an ambassador agreement originally
entered into by Bethard Group Limited (“BG”) and Unknown AB (“Unknown”), dated February 14, 2018 (and amended
on February 26, 2018 and on March 16, 2018), and thereafter assigned and novated by BG to Together Gaming Solutions p.l.c (“TGS”)
on April 30, 2019 and subsequently amended on March 27, 2020 (the “Zlatan Agreement”); and (vi) B2C online gambling licenses
in Sweden, Spain, Malta, and Ireland (each a “License” and together the “Licenses”).
As
described in the Purchase Agreement, Prozone Limited, a limited liability company incorporated in Malta (“Prozone”) prior
to the completion of all actions and the transactions (including the Transaction defined below) required to take place at the Closing
on the Closing Date (the “Closing”) intends to enter into (i) an asset transfer agreement with the Seller’s subsidiaries,
BG and TGS (the “Asset Transfer Agreements”), pursuant to which Prozone will acquire, prior to the Closing, full legal title
and ownership of the Assets (with the exception of the Licenses and the Zlatan Agreement) owned by each of BG and TGS, free and clear
from any Encumbrances;(ii) a white label platform licensing agreement with TGS for the Together Gaming Platform (the “Platform”)
(the “White Label Agreement”) regarding the Business; (iii) a turnkey platform licensing agreement with the TGS for the Platform
(the “Turnkey Agreement”); and (iv) a services agreement with BG for operational support services (the “Services Agreement”)
(the “Pre-Closing Restructuring”).
Following
the Pre-Closing Restructuring and prior to the Closing, the Seller assumed Prozone’s payment obligations to BG and TGS under
the Asset Transfer Agreements in consideration for receivables (of an aggregate amount that is equal to those payment obligations) due
by Prozone to the Seller in accordance with an assignment and novation agreement entered into between Prozone, the Seller, and BG and
an assignment and novation agreement entered into between Prozone, the Seller, and TGS (the “Assignment and Novation Agreements”).
These receivables were then capitalized (i.e., converted into shares in Prozone) and at which point Prozone had issued share capital
of the EUR 25,101,200 divided into 25,101,200 shares of EUR 1 each (the “Shares”), all of which was owned by the Seller.
The Seller subsequently sold all of the Shares of Prozone together with all rights attached to them and free from any Encumbrance to
the Company (the “Transaction”) on the Closing Date subject to the terms and conditions of the Purchase Agreement.
Following
the Closing, the Seller agreed to procure that each of the Licenses are transferred to Prozone as soon as practicable, subject to such
transfers being permitted under the relevant local regulations. Prozone agreed to operate for a minimum period of 24 months from the
Closing the Domains utilizing the Platform, pursuant to the terms of the White Label Agreement and/or the Turnkey Agreement. After 24
months from the Closing have passed, Prozone shall be free to terminate the White Label Agreement and/or Turnkey Agreement (as applicable)
and migrate the Domains and the Customer Databases to another platform of Prozone’s choice. The Seller agreed to procure that the
Zlatan Agreement (which is currently the subject of negotiation between TGS and Unknown) will be assigned and novated in favor of Prozone
pursuant to an assignment and novation agreement to be entered into between TGS, Unknown, and Prozone (the “Zlatan Agreement Assignment”).
The
Purchase Price for the Shares shall be an amount corresponding to the aggregate of (i) EUR 16,000,000 (the “Closing Payment”);
(ii) the additional consideration payable to the Seller by the Company as set out in Section 5 of the Purchase agreement (the “Additional
Payment”); and (iii) the shares of the Company’s common stock, par value $0.001 to be allotted and issued to the Seller by
the second year anniversary of the Closing Date, representing an aggregate value of the USD Currency Equivalent of EUR7,600,000 as set
out in Section 6 of the Purchase Agreement or such lower amount as may be applicable in accordance with Section 9.3 of the Purchase Agreement
(the “Share Consideration”, and together with the Closing Payment and the Additional Payment, the “Purchase Price”).
On
July 13, 2021, the Company and the Seller entered into an Amendment Agreement (the “Amendment”) with respect to the Purchase
Agreement, pursuant to which the Seller and the Company agreed to amend the Purchase Agreement, specifically the Purchase Price, as follows:
(i) the Company agreed to make a payment of EUR 12,000,000 (the “First Payment”) to the Seller by no later than July 13,
2021 (the “First Payment Date”) and a payment of EUR 4,000,000 (the “Second Payment”) to the Seller by no later
than October 1, 2021 (the “Second Payment Date”); (ii) the Company agreed to pay Seller an additional EUR 1,000,000 on the
First Payment Date, representing a refund to the Seller of an equivalent amount that the Seller has deposited with the Spanish Gaming
Authority (DGOJ) as a guarantee for regulatory purposes (the “Spanish Deposit Amount”). Further, the Additional Payment,
shall be increased from 12% of the Net Gaming Revenue during Relevant Period, effective July 1, 2021, to 15% of Net Gaming Revenue until
receipt of the Second Payment, following which it shall be reduced to 12% of Net Gaming Revenue for the remainder of the Relevant Period.
The
Additional Payment shall be reduced to 10% of Net Gaming Revenue in respect of any relevant jurisdiction where the Company has not yet
acquired the relevant B2C online gambling license for a three month period beginning July 31, 2021 but shall increase to 12% for the
remainder of the Relevant Period once the relevant license has been acquired by the Company.
On
July 13, 2021, the Company and the Seller entered into that certain Pledge of Shares Agreement (the “Pledge Agreement”),
whereby the Company agreed to pledge the Shares in favor of the Seller (the “Pledge”) as security for the Company’s
obligation to make the Second Payment by no later than the Second Payment Date, including any and all fees and/or expenses which the
Seller may incur in the protection or enforcement of its respective rights under the Purchase Agreement (the “Secured Obligations”).
The Pledge will be released by the Seller upon receipt by the Seller of the Second Payment. The Pledge Agreement constitutes a continuing
security for the due and punctual performance of all the Secured Obligations. The Pledge Agreement contains customary representations,
warranties and covenants, and other terms and conditions.
On
July 13, 2021, the Company and Seller, having met all conditions precedent in the Amendment consummated the closing for the Shares. Pursuant
to the Amendment, as consideration for the Shares, the Company paid the Seller EUR 12,000,000 at the Closing with the Second Payment
and Additional Consideration to follow in accordance with the Amendment.
Helix
Holdings, LLC Purchase Agreement
On
January 22, 2021, the Company entered into an equity purchase agreement (the “Helix Purchase Agreement”), by and among the
Company, Helix Holdings, LLC, a limited liability company incorporated under the laws of Delaware (“Helix”), and the equity
holders of Helix (the “Helix Equity Holders”), whereby the Company will acquire from the Helix Equity Holders all of the
issued and outstanding membership units of Helix (the “Helix Units”), making Helix a wholly owned subsidiary of the Company.
In
connection with the negotiation of the Helix Purchase Agreement, the Company advanced an aggregate of $400,000 to Helix during 2020 and
2021 in the form of loans (the “Helix Loans”). Upon execution of the Helix Purchase Agreement, the Company paid Helix an
additional $400,000 to be used for operating expenses pending the Closing (the “Operating Expense Payments”).
On
May 21, 2021, the Company and Helix amended the Helix Purchase Agreement pursuant to Amendment No. 1 to Equity Purchase Agreement (the
“Helix Amendment”) to, among other things, (A) update Exhibit A thereto, (B) provide for an additional indemnifiable event
by the Helix Equity Holders under Section 10.02 of the Helix Purchase Agreement with respect to post-closing pre-mature departures of
certain key employees of Helix, (C) extend the End Date (as defined in the Helix Purchase Agreement) to June 3, 2021, (D) provide for
a non-refundable operating expense payment to Helix in the amount of $100,000; provided, however, that if the transaction does not close
on or before June 1, 2021, the Company is required to make an additional non-refundable payment in the amount of $100,000 to Helix, (E)
increase the amount of the Purchase Price (as defined in the Helix Purchase Agreement) to be paid in cash from $8,500,000 to $10,000,000
and reduce the amount of the Purchase Price to be paid in stock from $8,500,000 to $7,000,000, and (F) change the Stock Payment (as defined
in the Helix Purchase Agreement) calculation from a variable formula to a fixed price formula, resulting in $7,000,000 of the Purchase
Price being payable to the Helix Equity Holders in shares of the Company’s common stock valued at $13.25 per share (528,302 shares).
On
June 1, 2021, the Company, Helix and the Helix Equity Holders, having met all conditions precedent in the Helix Purchase Agreement, consummated
the closing for the Helix Interests (the “Helix Closing”). Pursuant to the Helix Purchase Agreement, as consideration for
the Helix Interests, the Company paid the Helix Equity Holders at the Helix Closing: (i) $10,000,000 in cash (the “Helix Cash Consideration”)
and $7,000,000 in stock (the “Helix Stock Consideration”) through the issuance of 528,302 shares of the Company’s common
stock, par value $0.001 per share, determined using a price of $13.25 per share (the actual closing price of the Company’s common
stock on June 1, 2021 was $11.17 per share). In connection with the Helix Cash Consideration, the Company received credit for certain
loans and operating expense payments made by the Company to Helix during 2020 and 2021.
ggCIRCUIT
LLC Purchase Agreement
On
January 22, 2021, the Company entered into the GGC Purchase Agreement whereby the Company will acquire from the GGC Equity Holders all
of the issued and outstanding membership units of GGC (the “GGC Units”), making GGC a wholly owned subsidiary of the Company.
In
connection with the negotiation of the GGC Purchase Agreement, the Company advanced an aggregate of $600,000 to GGC during 2020 and 2021
in the form of loans (the “GGC Loans”). Upon execution of the GGC Purchase Agreement, the Company paid GGC an additional
$600,000 to be used for operating expenses pending the Closing (the “Operating Expense Payments”).
On
May 21, 2021, the Company and GGC amended the GGC Purchase Agreement pursuant to the Amendment No. 1 to Equity Purchase Agreement
(the “GGC Amendment”) to, among other things, (A) update Exhibit A thereto, (B) provide for an additional indemnifiable
event by the GGC Equity Holders under Section 10.02 of the GGC Purchase Agreement with respect to post-closing pre-mature departures
of certain key employees of GGC, (C) extend the End Date (as defined in the GGC Purchase Agreement) to June 3, 2021, (D) provide for
a non-refundable operating expense payment to GGC in the amount of $100,000; provided, however, that if the transaction does not
close on or before June 1, 2021, the Company is required to make an additional non-refundable payment in the amount of $100,000 to
GGC, (E) increase the amount of the Purchase Price (as defined in the GGC Purchase Agreement) to be paid in cash from $13,000,000 to
$15,000,000 and reduce the amount of the Purchase Price to be paid in stock from $13,000,000 to $11,000,000, and (F) change the
Stock Payment (as defined in the GGC Purchase Agreement) calculation from a variable formula to a fixed price formula, resulting in
$11,000,000 of the Purchase Price being payable to the GGC Equity Holders in shares of the Company’s common stock valued at
$13.25 per share (830,189 shares).
On
June 1, 2021, the Company, GGC and the GGC Equity Holders, having met all conditions precedent in the GGC Purchase Agreement, consummated
the closing for the GGC Interests (the “GGC Closing”). Pursuant to the GGC Purchase Agreement, as consideration for the GGC
Interests, the Company paid the GGC Equity Holders at the GGC Closing: (i) $15,000,000 in cash (the “GGC Cash Consideration”)
and $11,000,000 in stock (the “GGC Stock Consideration”) through the issuance of 830,189 shares of the Company’s common
stock, par value $0.001 per share, determined using a price of $13.25 per share (the actual closing price of the Company’s common
stock on June 1, 2021 was $11.17 per share). In connection with the GGC Cash Consideration, the Company received credit for certain loans
and operating expense payments made by the Company to GGC during 2020 and 2021.
Competitive
Advantages/Operational Strengths
The
online gambling and wagering industry is increasingly competitive. With relatively low barriers to entry, new competitors are entering
the esports wagering and video game tournament segments. In both of these segments, there currently exist several major competitors.
Most of EEG’s current competitors, including Unikrn, bet365, William Hill, Betway, and Pinnacle Sports, have far greater resources
than us.
However,
we believe the following strengths position us for sustainable growth:
Management
Team and Key Personnel Experience: EEG’s Board includes senior managers with extensive experience in online gambling, esports,
information technology, compliance, regulation, accounting and finance. EEG’s Officers and management include individuals with
extensive experience in online gambling, esports, information technology, marketing, business development, payment processing, compliance,
regulation, accounting, finance and customer service.
Unique
Positioning within Digital Gaming: EEG is the only digital gaming company with an esports-first focus and only digital gaming
company with full esports businesses; leading the effort to broaden legislation for betting on esports competitions. We are uniquely
focused on connecting to customers across a broad set of retail and digital businesses to achieve greater revenue, scale, and profitability,
as well as shaping esports infrastructure to facilitate omni-channel betting.
Top
Tier Technology Assets:
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EEG
has acquired businesses with state-of-the-art B2B/B2C technologies across esports competition infrastructure, for in-person and internet-based
competitions, for tournaments, esports wagering and skill-based betting (P2P).
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Acquiring
Genji Analytics, an established esports analytics provider for game publishers and esports leagues, will allow for reorientation
towards betting, through provision of customized marketing, better betting lines and greater customer retention.
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ggCircuit
Proprietary Platform: ggCircuit’s ggLeap cloud-based management software solution enables Gaming Centers to run games through
the stat integrated client, reward gamers for playing the games they love, as well as run their own local tournaments. ggCircuit
is currently used by over 600 LAN centers and connects with over 2 million gamers monthly. In the future EEG plan to offer products
such as player-vs-player betting to the gamers on the network.
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Lucky
Dino’s online casino platform - included in the acquisition of Lucky Dino was iDefix, a modern online casino platform licensed
in Malta, upon which the Lucky Dino’s online casino brands operate on . iDefix provides a full technical solution for casino
operations, with various management tools as well as in-depth business intelligence reporting and analysis. The technology is built
on a scalable event-driven micro-services-based architecture offering advanced automation features including AML compliance and KYC
handling, Responsible Gambling management and monitoring, fraud and bonus abuse detection, as well as Gamification, CRM and bonus
management.
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Argyll’s
proprietary sports betting rewards and bonus efficiency technology, provides and industry-leading customer loyalty program, driving
above industry customer retention rates and player lifetime values. The Program helped earn Argyll the Innovative Start-up of the
Year award and the 2018 EGR Marketing & Innovation Awards, and will be able to be leveraged across all of EEG’s verticals.
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Argyll’s
technology and Lucky Dino’s full igaming tech stack will accelerate the development of EEG’s new Vie esports-centric
platform, and generate synergies from further digital gaming acquisitions.
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Strong
Brand Partnerships: EEG has already partnered, via “affiliate Marketing Agreements’’, with ten leading brands
in pro sports, including Football, Hockey, Basketball and Soccer, with an aggregate fanbase of over 50 million, as well as with several
individual social media influencers.
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Pro
sports team partnerships lever huge customer databases for esports tournament participation and betting, lowering EEGs customer acquisition
costs.
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As
a “Marketing Affiliate’’, the esports team will provide their fans with a link to EEG’s online tournament
platform (EGL), where the fan can enter tournaments to win team merchandise, and subscribe to subsequent tournaments.
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Helix
LAN Center Expertise: Our Helix team prides themselves on building LAN Centers in an efficient manner and programming the centers
to engage local communities. This programming (community tournaments, after-school camps, pro-team watch parties) is what drives traffic
to these centers on a day-in day-out basis. Because of the team’s expertise in this area, we have been approached by numerous entities
such as universities, theme parks and pro sports teams to build and manage centers on their properties.
Growth
Strategy
In
the future, we intend to:
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expand
its Esports services into more of the 41 states where skill-based gambling is legal, enhance the Product offering, as well as create
relationships with players that will migrate into their Vie.gg real-money wagering platform.
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expand
its Esports Wagering services into more jurisdictions, utilizing the recently acquired MGA gaming license, which provides opportunity
for access into over 180 countries, as well as the recent multi-year partnership with Twin River Worldwide Holdings, Inc (NYSE: TRWH),
now Bally’s Corporation (NYSE: BALY), to launch our proprietary mobile sports betting product in the state of New Jersey.
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continue
with our M&A strategy in the iGaming and Traditional Sports Betting space, to acquire profitable Operators in different jurisdictions,
that will also allow for cross-pollination of services (Sportsbook, Casino and Esports).
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Future
Products and Services:
Online
Esports Tournament Play
EEG
intends to offer players from around the world, including the United States, the ability to enter and participate in online video game
tournaments and win cash prizes, via our enhanced EGL Tournament platform. Online esports tournament play consists of two or more people
playing against each other in a game from their personal phones or computers, where such players do not necessarily have to be playing
in real time. These events could be held over the course of a day, a week or even a month and the winner will be the one with the top
score or the fastest time at the conclusion of the event. Cash-based tournaments involving games of skill are not considered gambling
in most U.S. states because the generally accepted definition of gambling involves three specific things: (1) the award of a prize, (2)
paid-in consideration (meaning entrants pay to compete) and (3) an outcome determined on the basis of chance. As a result, games of skill
are not generally subject to the same laws and regulations as our esports event wagering service. We expect participants in our tournaments
being able to enter and play against each other with prize money distributed to the last remaining competitors. We anticipate collecting
a tournament entry fee for our tournaments, as well as a percentage of total winnings that are paid to users (typically 10% of the entry
fees) and thus none of their money will be at risk or otherwise dependent on the outcome. We intend to offer users a wide selection of
video games of skill to be played online for real money in small groups to major tournaments. The tournament platform will also serve
as a tool to help them determine which markets they are finding the most esports players. we believe using the tournament platform to
penetrate the US market will allow us to grow our brand within the esports community and lead to lower customer-acquisition-costs for
their wagering platform.
International
Market Expansion
EEG
received a Gaming Service License for online betting from the Malta Gaming Authority in April 2020, established a brick and mortar office
in such jurisdiction and commenced online gaming operations in that jurisdiction in February 2021, both on the Vie.gg and Argyll Brands.
The Lucky Dino and Bethard brand acquisitions added additional Spanish and Swedish licenses, together with UK and Irish licenses that
Argyll already operates under. In the future, EEG may consider obtaining additional country specific gaming licenses should we determine
there is sufficient local demand for their services in these markets. In order to effectively penetrate international markets, we intend
to translate our website into several additional languages and offer customer service and technical support in the local language of
key markets.
EEG’s
Online Wagering Platforms
According
to Zion Market Research’s, Online Gambling & Betting Market by Game Form (Poker, Casino, Sports Betting, Bingo, Lottery, Horse
Racing Betting, and Others) and by Component (Hardware, Software, and Service): Global Industry Perspective, Comprehensive Analysis and
Forecast, 2017 – 2024, the online gambling market represents one of the fastest growing segments of the gambling industry. Zion
Market estimated the size of the global online gambling market in 2018 was in excess of $45.8 billion and is projected to reach $94.4
billion by 2024.
Although
the Vie.gg brand is focused solely on offering online wagering on the widest range of esports events broadcast from around the world,
the acquisition of Lucky Dino included the acquisition of iDefix, a modern online casino platform licensed in Malta, that the Lucky Dino
online casino brands operate on iDefix provides a full technical solution for casino operations, with various management tools as well
as in-depth business intelligence reporting and analysis. The Argyll and Bethard Brands offer online users traditional casino style games
such as roulette, blackjack , or slots, as well as offering online wagering on traditional sporting events such as soccer, horse racing
and football.
On
the Vie.gg esports-focused wagering platform, a player can place a bet on a team participating in any number of tournaments which are
scheduled to be held in the upcoming weeks. They also maintain a “how to play” section on the website which provides players
with instructional videos on placing bets as well as other pieces of information that may be beneficial to an inexperienced player or
a new user of our website. Additionally, we maintain a “frequently asked questions” section which provides customers with
the ability to easily navigate general questions relating to the website, personal account information, payment processing, betting rules
and procedures as well as tips.
Marketing
and Sales Initiatives
The
Company has several sponsorship marketing agreements in place for its website as well as an extended marketing agreement with Dignitas,
an esports brand owned by Harris Blitzer sports and entertainment with multiple professional teams playing several titles with over a
million fans worldwide. The Company also has an agreement with Allied Esports to run esports tournaments to promote the brand globally
to esports fans.
EEG
is looking to expand into new geographic territories by obtaining licenses to operate in those territories. The need for hands-on implementation
in these territories and support will require investment in additional marketing activities, offices, and other overhead.
We
will also accelerate our expansion if we find complementary businesses that they are able to acquire in other markets. Marketing efforts
to expand into new territories have included esports team and tournament sponsorship, affiliate marketing, social media advertising,
content creation, and attendance at esports and gaming events in addition to personal contact with other industry leaders.
Esports
games are played by professional teams, amateur teams, and individuals. Professional esports teams have their own social media presence,
with some of the top professional teams having millions of fans who follow and interact with the team on a regular basis. A website of
a professional esports team usually contains specific information about the team and lists upcoming tournaments or events in which the
team will be participating. As part of EEG’s efforts to market our online gaming services, we are entering into affiliate marketing
agreements with professional Esports teams.
As
a marketing affiliate, an esports team will promote our brand in the content they create and on their social media and through their
Website.
We
plan to increase marketing efforts and awareness of our websites, www.vie.gg, www.sportnation.bet, www.luckydino.com
and www.bethard.com, as well as future offerings by:
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Educating
sports betting consumers to bet on esports in an effort to convert gamers to start betting on esports.
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Sponsoring
professional esports teams and tournaments that have a global reach.
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Working
with sports and gaming celebrities and social media influencers who have an interest in video games and esports to generate new customers.
EEG intends to increase its efforts in attracting esports players and other celebrities who have an interest in video games and esports.
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Using
a multichannel approach focused on acquiring and retaining customers we intend to utilize multiple social media platforms to promote
our wagering business including, but not limited to, Facebook Twitter, Instagram, Snapchat, TikTok, Youtube, Twitch, Whatsapp, QQ,
WeChat, email and SMS messages and using online advertisements, paid search optimization, and various social media campaigns to increase
our online presence and drive traffic to our website. EEG intends to increase its investments in online advertisements, including
esports gambling-related websites. We also intend to continue to invest in optimizing the Company’s website so it will attain
a high ranking under key search words or phrases, such as “esports gambling.”
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Regulations
Affecting our Business
The
offering and operation of online real-money gambling platforms and related software and solutions is subject to extensive regulation
and approval by various national, federal, state, provincial, tribal and foreign agencies (collectively, “gaming authorities”).
Gambling laws require EEG to obtain licenses or findings of suitability from gaming authorities for EEG, including each of our subsidiaries
engaged in these activities, and certain of our directors, officers, employees and in some instances, significant shareholders (typically
beneficial owners of more than 5% of a company’s outstanding equity). The criteria used by gambling authorities to make determinations
as to qualification and suitability of an applicant varies among jurisdictions, but generally require the submission of detailed personal
and financial information followed by a thorough and sometimes lengthy investigation. Gaming authorities have broad discretion in determining
whether an applicant qualifies for licensing or should be found suitable. Gambling authorities generally look to the following criteria
when determining to grant a license or finding of suitability, including (i) the financial stability, integrity and responsibility of
the applicant, (ii) the quality and security of the applicant’s online real-money platform and gaming equipment and related software,
as applicable, and (iii) the past history of the applicant. Gambling authorities may, subject to certain administrative proceeding requirements,
(i) deny an application, or limit, condition, restrict, revoke or suspend any license, registration, finding of suitability or approval,
and (ii) fine any person licensed, registered or found suitable or approved. Notwithstanding the foregoing, some jurisdictions explicitly
prohibit gaming in all or certain forms and we will not market our gambling services in these jurisdictions. If any director, officer
or employee of EEG fails to qualify for a license or is found unsuitable (including due to the failure to submit the required documentation)
by a gaming authority, EEG may deem it necessary, or be required to, sever its relationship with such person, which may include terminating
the employment of any such person. Gambling authorities have the right to investigate any individual or entity having a material relationship
with EEG, to determine whether such individual or entity is suitable or should be licensed to do business as a business associate of
ours. In addition, certain gambling authorities monitor the activities of the entities they regulate both in their respective jurisdiction
and in other jurisdictions to ensure that these entities are in compliance with local standards on a worldwide basis.
On
May 14, 2018, the Supreme Court of the United States struck down the Professional and Amateur Sports Protection Act, a 1992 law that
barred state-authorized sports gambling with some exceptions and made Nevada the only state where a person could wager on the results
of a single game. Since the Supreme Court’s decision, sports gambling has commenced in several states and several more states have
enabling legislation pending. We believe that the Supreme Court’s decision will allow our platform to be used in the United States
at some point in the future. We plan to explore expansion of our esports online wagering platform into the US market place at the appropriate
time.
The
Unlawful Internet Gambling Enforcement Act of 2006 (“UIEGA”) made it a federal offense, punishable by up to five years in
prison, for a business to accept payments “in connection with the participation of another person in unlawful internet gambling.”
In support of such new prohibitions, the UIGEA uses a variety of terms — some of which are ambiguous or undefined. Initially, the
UIGEA broadly defines a “bet or wager” as: the staking or risking by any person of something of value upon the outcome of
a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person
will receive something of value in the event of a certain outcome.
Further,
a “bet or wager” specifically includes a chance on a lottery or prize awarded predominantly by chance; a “scheme”
as defined in Title 28, U.S.C. § 3702 relating to government-sponsored amateur or professional sports betting and, “any instructions
or information pertaining to the establishment or movement of funds by the bettor or customer in, to, or from, an account with the business
of betting or wagering.” While this final prohibition incorporates the term “business of betting or wagering,” that
term is not specifically defined anywhere in the UIGEA. The only reference to that term comes in § 5362(2), which states: The term
“business of betting or wagering” does not include the activities of a financial transaction provider, or any interactive
computer service or telecommunications service.
Nonetheless,
the law does contain specific prohibitions. In order to establish a violation of the UIGEA, it must be shown that:
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A
“person” was engaged in the business of betting or wagering;
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2.
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That
person knowingly accepted a financial instrument or proceeds thereof; and
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That
instrument was accepted (by the person) in connection with the participation of another person in “unlawful Internet gambling.”
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In
the context of this statute “unlawful Internet gambling” is defined as follows:
To
place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet
where such bet or wager is unlawful under any applicable Federal or State law in the state or tribal lands in which the bet or wager
is initiated, received, or otherwise made.
Therefore,
the UIGEA only applies to online gambling transactions that are already prohibited by other state, federal, or tribal laws. Therefore,
in order for the financial transaction to be prohibited by § 5363 of the UIGEA, the bet or wager must be “initiated, received,
or otherwise made” in a place where such activity (the bet of wager) violates preexisting state, federal, or tribal law.
At
the current time, we are able to accept wagers on our vie.bet website from residents of over 180 jurisdictions including Canada, Japan,
and South Africa, under our MGA license. We do not accept wagers from United States residents at this time, and will not do so until
our vie.gg site is live in New Jersey in compliance with all applicable regulations, and therefore the bet or wager on our platform is
not “initiated, received, or otherwise made” in a place where such activity violates pre-existing state, federal, or tribal
law.
Great
Britain
Betting
and gaming with respect to customers in Great Britain (England, Scotland and Wales, but excluding Northern Ireland, the Channel Islands
and the Isle of Man) is regulated by the Gambling Act 2005 (the “2005 Act”). The 2005 Act established the Gambling Commission
as the regulator responsible for granting licenses to operate gambling services as well as overseeing compliance with applicable law
and regulation. In 2014, the UK Parliament passed the Gambling (Licensing and Advertising) Act 2014, which required all remote gambling
operators serving customers in Great Britain or advertising in Great Britain to obtain a license from the Gambling Commission. Our Argyll
Brands operate in the UK pursuant to remote operating licenses issued by the Gambling Commission along with the separate software and
“key personnel” individual licenses. Various additional operating subsidiaries of EEG are endorsed upon the licenses and
are hence authorized to carry out the licensed activities on a so-called “umbrella” basis in addition to the “primary”
licensee. The terms of these operating licenses require that the relevant subsidiaries of EEG must source all gambling software used
in connection with British players from the holder of a gambling software licenses issued by the Gambling Commission. So long as the
applicable license fees are paid and the British licenses are not suspended, revoked or otherwise surrendered, EEG expects that the licenses
will remain valid indefinitely.
British
regulations require licensed companies to file quarterly returns as well as a more extensive “annual assurance statement”
to provide the Gambling Commission with information regarding matters such as significant changes in control systems, risk management
and governance since the last assurance statement, how the licensee is addressing gambling by problem and at-risk customers and any improvements
that the licensee plans to implement to its control systems, risk management and governance and/or its approach to addressing problem
and at-risk gambling and promoting socially responsible gambling. The Gambling Commission also subjects its licensees to periodical regulatory
compliance visits subsequent to which recommendations may be issued to the licensee.
Intellectual
Property
EEG
has not filed to register any patents, trade names or trademarks in any jurisdictions in relation to our Vie.gg brand, but we do intend
to file applications to register patents, tradenames or trademarks in the near future.
Argyll
owns a European Union registered trade mark for its SportNation brand.
EEG’s
Risks and Challenges
An
investment in EEG’s securities involves a high degree of risk. You should carefully consider the risks summarized below. The risks
are discussed more fully in the “Risk Factors” section of this prospectus immediately following this prospectus summary.
These risks include, but are not limited to, the following:
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We
are a development stage company with a limited operating history.
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The
gaming and interactive entertainment industries are intensely competitive. Esports faces competition from a growing number of companies
and, if Esports is unable to compete effectively, its business could be negatively impacted.
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They
have a history of accumulated deficits, recurring losses and negative cash flows from operating activities. We may be unable to achieve
or sustain profitability
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The
failure to enforce and maintain our intellectual property rights could enable others to use trademarks used by their business which
could adversely affect the value of the Company.
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The
Company may be subject to claims of intellectual property infringement or invalidity and adverse outcomes of litigation could unfavorably
affect its operating results.
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Compromises
of the Company’s systems or unauthorized access to confidential information or EEG’s customers’ personal information
could materially harm EEG’s reputation and business.
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There
is a risk that the Company’s network systems will be unable to meet the growing demand for its online products.
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Systems,
network or telecommunications failures or cyber-attacks may disrupt the Company’s business and have an adverse effect on EEG’s
results of operations.
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Malfunctions
of third-party communications infrastructure, hardware and software expose Esports to a variety of risks
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THE
OFFERING
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Common
stock offered by us
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2,205,072
shares of our common stock (at an assumed offering price of $9.07
per share, which was the closing price of our common stock on The NASDAQ Capital Market on September 2, 2021). The actual number
of shares to be issued will vary depending on the sales price in this offering.
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Total
Common stock outstanding before the offering
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21,970,085
shares of common stock.(1)
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Common
stock to be outstanding after the offerings
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Up
to 24,175,157 assuming the sale of all of the shares of common stock being offered by us (at an assumed offering price of
$9.07 per share, which was the closing price of our common stock on The NASDAQ Capital Market on September 2,
2021). The actual number of shares to be issued will vary depending on the sales price in this offering.
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Manner
of offering
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“At
the market offering” that may be made from time to time on The NASDAQ Capital Market or other market for our common stock in
the U.S. through our agent, Maxim Group, LLC (“Maxim”). Maxim will make all sales using commercially reasonable efforts
consistent with its normal trading and sales practices, on mutually agreeable terms between the sales agent and us. See “Plan
of Distribution.”
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Use
of proceeds
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We
will use the net proceeds from this offering for general corporate purposes. See “Use of Proceeds” on page S-17.
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Risk
factors
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An
investment in our shares of common stock is highly speculative and involves a number of risks. You should carefully consider the
information contained in the “Risk Factors” section beginning on page S-15 of this prospectus supplement, and elsewhere
in this prospectus supplement and the base prospectus, and the information we incorporate by reference, before making your investment
decision.
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NASDAQ
Capital Market symbol
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Our
common stock is listed on The NASDAQ Capital Market under the symbol “GMBL” and warrants are listed under the symbol
“GMBLW.”
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The
number of shares of common stock to be outstanding after this offering excludes the following as of September 2, 2021:
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3,350,599
shares of common stock issuable upon exercise of warrants outstanding having a weighted average exercise price of $12.21 per share,
and inclusive of the 2,000,000 Series A Warrants outstanding with an exercise price of $17.50 that were issued in connection with
the sale of the Convertible Note;
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2,000,000
shares issuable upon a conversion of the Convertible Note into shares of common stock at a conversion price of $17.50;
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2,000,000
Series B Warrants that were issued in connection with the sale of the Convertible Note and can be exercised at a price of $17.50
should the Company redeem the Convertible Note prior to its maturity date of June 2, 2023;
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shares
contingently issuable in connection with the Bethard acquisition, whereby the amount issuable in shares shall be determined prior
to the 24 month anniversary date of the acquisition, or July 13, 2023, and based on U.S. dollar equivalent of up to a maximum contingent
share consideration amount of €7,600,000 divided by the 30-day volume weighted average unit price per share of Common Stock
at the time of issuance.
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473,926
shares of common stock issuable upon exercise of outstanding options
with a weighted average exercise price of $5.49 per share; and
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609,654
shares reserved for future issuances under our equity compensation plans;
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RISK
FACTORS
An
investment in our securities involves a high degree of risk. Before deciding whether to invest in our securities, you should consider
carefully the risks described below and discussed under the sections captioned “Risk Factors” contained in our Annual Report
on Form 10-K for the year ended June 30, 2020, which are incorporated by reference into this prospectus supplement and the accompanying
base prospectus in their entirety, together with other information in this prospectus supplement, the accompanying base prospectus, the
information and documents incorporated by reference herein and therein, and in any free writing prospectus that we have authorized for
use in connection with this offering. If any of these risks actually occurs, our business, financial condition, results of operations
or cash flow could be seriously harmed. This could cause the trading price of our common stock to decline, resulting in a loss of all
or part of your investment.
Risks
Related to this Offering
Our
management will have broad discretion over the use of the net proceeds from this offering, you may not agree with how we use the proceeds
and the proceeds may not be invested successfully.
We
have not designated any portion of the net proceeds from this offering to be used for any particular purpose. Accordingly, our management
will have broad discretion as to the use of the net proceeds from this offering and could use them for purposes other than those contemplated
at the time of commencement of this offering. Accordingly, you will be relying on the judgment of our management with regard to the use
of these net proceeds, and you will not have the opportunity, as part of your investment decision, to assess whether the proceeds are
being used appropriately. It is possible that, pending their use, we may invest the net proceeds in a way that does not yield a favorable,
or any, return for our company.
If
you purchase shares of common stock in this offering, you will suffer immediate and substantial dilution in the book value of your investment.
The
price per share of our common stock in this offering may exceed the net tangible book value per share of our common stock outstanding
prior to this offering. Therefore, if you purchase shares of our common stock in this offering, you may pay a price per share that substantially
exceeds our net tangible book value per share after this offering. See “Dilution” for a more detailed discussion of the dilution
you may incur in connection with this offering.
There
may be future sales or other dilution of our equity, which may adversely affect the market price of our common stock.
We
are generally not restricted from issuing additional common stock, including any securities that are convertible into or exchangeable
for, or that represent the right to receive, common stock. The market price of our common stock could decline as a result of sales of
common stock or securities that are convertible into or exchangeable for, or that represent the right to receive, common stock after
this offering or the perception that such sales could occur.
Sales
of a significant number of shares of our common stock in the public markets, or the perception that such sales could occur, could cause
the market price of our common stock to drop significantly, even if our business is doing well.
Sales
of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in
the market that the holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. After
this offering, assuming we sell $20,000,000 shares of common stock at an assumed offering price of $9.07 per share, which was
the closing price of our common stock on The NASDAQ Capital Market on September 2, 2021, we will have outstanding 24,175,157
shares of common stock based on 21,970,085 shares of common stock outstanding on September 2, 2021. The shares
outstanding also include the shares that we are selling in this offering, which may be resold in the public market immediately without
restriction, unless purchased by our affiliates.
Because
we do not intend to declare cash dividends on our shares of common stock in the foreseeable future, stockholders must rely on appreciation
of the value of our common stock for any return on their investment.
We
have never declared or paid cash dividends on our common stock. We currently anticipate that we will retain future earnings for the development,
operation and expansion of our business and do not anticipate declaring or paying any cash dividends in the foreseeable future. In addition,
the terms of any future debt agreements may preclude us from paying dividends. As a result, we expect that only appreciation of the price
of our common stock, if any, will provide a return to investors in this offering for the foreseeable future.
We
may not be able to maintain compliance with NASDAQ’s continued listing requirements.
Our
common stock is listed on The NASDAQ Capital Market. There are a number of continued listing requirements that we must satisfy in order
to maintain our listing on The NASDAQ Capital Market. If we fail to maintain compliance with all applicable continued listing requirements
for The NASDAQ Capital Market and NASDAQ determines to delist our common stock, the delisting could adversely affect the market liquidity
of our common stock, our ability to obtain financing to repay debt and fund our operations.
USE
OF PROCEEDS
After
giving effect to the sale of the maximum number of shares of our Common Stock under this prospectus supplement, we estimate that the
maximum potential net proceeds we will receive will be approximately $19,370,000 after deducting the agent’s fees and estimated
offering expenses. However, we cannot guarantee if or when these net proceeds will be received. The amount of proceeds from this offering
will depend upon the number of shares of our common stock sold and the market price at which they are sold. There can be no assurance
that we will be able to sell any shares under or fully utilize the engagement letter with Maxim as a source of financing.
We
intend to use the net proceeds for the Second Payment owed to Gameday Group Plc, working capital and other general corporate purposes.
We
have not determined the amount of net proceeds to be used specifically for such purposes and, as a result, management will retain broad
discretion over the allocation of net proceeds. The occurrence of unforeseen events or changed business conditions could result in the
application of the net proceeds from this offering in a manner other than as described in this prospectus supplement. Pending the use
of any net proceeds, we expect to invest the net proceeds in interest-bearing, marketable securities.
CAPITALIZATION
The
following table sets forth our capitalization as of March 31, 2021:
|
|
●
|
On
an actual basis;
|
|
|
●
|
On
a pro forma basis to give effect to following:
|
GGC
and Helix acquisitions (1):
|
|
(i)
|
the
payment of $12,900,000 in cash and $9,273,211 in common stock to the GGC Equity Holders on June 1, 2021;
|
|
|
(ii)
|
the
payment of $7,790,651 in cash and $5,901,133 in common stock to the Helix Equity Holders on June 1, 2021;
|
|
|
(iii)
|
payments
totaling $200,000 to the GGC Equity Holders and Helix Equity Holders prior to June 1, 2021 to fund operating expenses;
|
|
|
(iv)
|
payments
totaling $2,809,349 that were deposited into escrow at the closing of the GGC and Helix acquisitions that is contingent upon future
service by certain GGC Equity Holders and Helix Equity Holders
|
|
|
(v)
|
payment of transaction costs of $470,420 upon closing
of the GGC and Helix acquisitions.
|
Bethard
acquisition:
|
|
(i)
|
the
initial cash payment of €13,000,000 (approximately $15,346,019 using exchange rates in effect at the acquisition date) comprised
of €12,000,000 (approximately $14,165,556 using exchange rates in effect at the acquisition date) paid in cash at closing and
€1,000,000 (approximately $1,180,463 using exchange rates in effect at the acquisition date) paid in cash to acquire a regulatory
deposit for the Bethard operations in Spain.
|
Issuance
of Convertible Note:
|
|
(i)
|
the
issuance of the Convertible Note on June 2, 2021, with an original principal amount of $35,000,000 with proceeds received of $32,515,000,
net of debt issuance costs of $2,485,000.
|
|
|
●
|
on
a pro forma, as adjusted basis to give effect to (i) the receipt of estimated net
proceeds of $19,370,000 assuming the sale of 2,205,072 shares of our common
stock (at an assumed offering price of $9.07 per share, which was the closing price
of our common stock on The NASDAQ Capital Market on September 2, 2021), after
deducting the estimated commissions payable by us; and (ii) the Second Payment of €4,000,000
(approximately $4,721,852 using exchange rates in effect at the acquisition date) that is
payable in cash for Bethard no later than October 1, 2021 as described under “Use
of Proceeds”.
|
You
should read the data set forth in the table below in conjunction with (a) our financial statements, including the related notes, and
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” from our Annual Report on Form
10-K for the fiscal year ended June 30, 2020, and (b) our unaudited condensed consolidated financial statements, including the related
notes, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” from our Quarterly
Report on Form 10-Q for the quarterly period ended March 31, 2021, which are incorporated by reference into this prospectus supplement
and the accompanying prospectus.
|
|
|
As
of March 31, 2021
|
|
|
|
|
Actual
(Unaudited)
|
|
|
Pro
Forma
|
|
|
Pro Forma,
As Adjusted
|
|
|
Cash
and restricted cash
|
|
$
|
20,309,049
|
|
|
$
|
13,307,610
|
|
|
$
|
27,955,758
|
|
|
Long-term Debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
payable
|
|
$
|
345,039
|
|
|
$
|
345,039
|
|
|
$
|
345,039
|
|
|
Senior
convertible note
|
|
|
-
|
|
|
|
32,515,000
|
|
|
|
32,515,000
|
|
|
Total
Debt
|
|
|
345,039
|
|
|
|
32,860,039
|
|
|
|
32,860,039
|
|
|
Stockholders’
equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
Common
stock, $0.001 par value, 500,000,000 shares authorized and 20,166,740 shares issued and outstanding, actual, 21,525,231 shares issued
and outstanding pro forma, 23,730,303 shares issued and outstanding, pro forma as adjusted(2)
|
|
|
20,167
|
|
|
|
21,525
|
|
|
|
23,730
|
|
|
Additional
paid-in capital
|
|
|
104,417,852
|
|
|
|
119,590,838
|
|
|
|
138,958,633
|
|
|
Accumulated
deficit
|
|
|
(42,077,212
|
)
|
|
|
(42,547,632
|
)
|
|
|
(42,547,632
|
)
|
|
Accumulated
other comprehensive loss
|
|
|
(955,702
|
)
|
|
|
(955,702
|
)
|
|
|
(955,702
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
stockholders’ equity
|
|
|
61,405,105
|
|
|
|
76,109,029
|
|
|
|
95,479,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
capitalization
|
|
$
|
61,750,144
|
|
|
$
|
108,969,068
|
|
|
$
|
128,339,068
|
|
|
(1)
|
The
Company issued 830,189 shares of common stock with a par value of $0.001 to the GGC Equity Holders and 528,302 shares of common stock
with a par value of $0.001 to the Helix Equity Holders at closing of these acquisitions. The closing share price on the date of acquisition
of GGC and Helix was $11.17.
|
|
|
|
|
(2)
|
The
number of shares of common stock to be outstanding after this offering excludes the following as of September 2,
2021:
|
|
|
●
|
3,350,599
shares of common stock issuable upon exercise of warrants outstanding having a weighted average exercise price of $12.21 per share,
and inclusive of the 2,000,000 Series A Warrants outstanding with an exercise price of $17.50 that were issued in connection with
the sale of the Convertible Note;
|
|
|
●
|
2,000,000
shares of common stock issuable upon a conversion of the Convertible Note into shares of Common Stock at a conversion price of $17.50;
|
|
|
●
|
2,000,000
Series B Warrants that were issued in connection with the sale of the Convertible Note and can be exercised at a price of $17.50
should the Company redeem the Convertible Note prior to its maturity date of June 2, 2023;
|
|
|
●
|
shares
contingently issuable in connection with the Bethard acquisition, whereby the amount issuable in shares shall be determined prior
to the 24 month anniversary date of the acquisition, or July 13, 2023, and based on U.S. dollar equivalent of up to a maximum contingent
share consideration amount of €7,600,000 divided by the 30-day volume weighted average unit price per share of common stock
at the time of issuance.
|
|
|
●
|
473,926
shares of common stock issuable upon exercise of outstanding options
with a weighted average exercise price of $5.49 per share; and
|
|
|
●
|
609,654
shares reserved for future issuances under our equity compensation plans;
|
DILUTION
If
you invest in our common stock, your interest will be diluted immediately to the extent of the difference between the public offering
price per share and the adjusted net tangible book value per share of our common stock after this offering.
The
net tangible book value of our common stock as of March 31, 2021, was approximately $16,056,865 or approximately $0.80 per share, based
on 20,166,740 shares of common stock outstanding at March 31, 2021. Net tangible book value per share represents the amount of our total
tangible assets, excluding goodwill and intangible assets, less total liabilities, divided by the total number of shares of our common
stock outstanding. Dilution per share to new investors represents the difference between the amount per share paid by purchasers for
each share of common stock in this offering and the net tangible book value per share of our common stock immediately following the completion
of this offering.
Pro
forma net tangible book value per share gives effect to net tangible book value of our common stock at March 31, 2021 as well as the
acquisitions of GGC, Helix and Bethard and the issuance of the Convertible Note subsequent to March 31, 2021, including the issuance
of 830,189 shares and 528,302 shares of common stock issued in the acquisition of GGC and Helix, respectively. After giving effect to
these transactions, our pro forma negative net tangible book value as of March 31, 2021, would have been ($42,628,765), or $($1.98) per share.
After giving effect to the sale
of up to a maximum aggregate amount of 2,205,072 shares of common stock, at an assumed offering price of $9.07 per share,
which was the closing price of our common stock on The NASDAQ Capital Market on September 2, 2021, and after deducting estimated
commissions, our pro forma as adjusted negative net tangible book value as of March 31, 2021 would have been ($23,258,765)
or ($0.98) per share. This represents an immediate increase in our pro forma negative net tangible book value of $1.00
per share to our existing stockholders and an immediate dilution in as-adjusted negative net tangible book value of $10.05
per share to purchasers of our common stock in this offering, as illustrated by the following table:
|
Offering price per share
|
|
|
|
|
|
$
|
9.07
|
|
|
Net tangible book value per share as of March 31, 2021
|
|
$
|
0.80
|
|
|
|
|
|
|
Pro forma decrease attributable to pro forma adjustments
|
|
$
|
(2.78
|
)
|
|
|
|
|
|
Pro forma negative net tangible book value per share as of March 31, 2021
|
|
$
|
(1.98
|
)
|
|
|
|
|
|
Increase in pro forma net tangible book value per share attributable to this offering
|
|
$
|
1.00
|
|
|
|
|
|
|
Pro forma as adjusted negative net tangible book value per share after
this offering
|
|
|
|
|
|
$
|
(0.98
|
)
|
|
Dilution per share to new investors participating in this offering
|
|
|
|
|
|
$
|
10.05
|
|
The
table above is based on 20,166,740 shares of common stock outstanding as of March 31, 2021, and 21,525,231 shares of common stock outstanding
on a pro forma basis after giving effect to the acquisitions of GGC and Helix, and 23,730,303 on a pro forma as adjusted
basis after giving effect to this offering.
To
the extent that after March 31, 2021, any outstanding warrants were or are exercised, or we otherwise issued or issue additional shares
of common stock in the future at prices per share below the price per share for any shares sold in this offering, there will be further
dilution to new investors.
DESCRIPTION
OF COMMON STOCK
We
are offering up to $20,000,000 shares of our common stock. As September 2, 2021, our authorized common stock consisted
of 500,000,000 shares of common stock, par value $0.001 per share, of which 21,970,085 shares were issued and outstanding.
The
authorized and unissued shares of common stock are available for issuance without further action by our stockholders, unless such action
is required by applicable law or the rules of any stock exchange on which our securities may be listed. A description of the common stock
we are offering pursuant to this prospectus supplement is set forth under the heading “Descriptions of the Securities We May Offer,”
starting on page 16 of the accompanying base prospectus.
PLAN
OF DISTRIBUTION
On
September 3, 2021, we entered into a sales agreement with Maxim under
which we may issue and sell up to a maximum aggregate amount of $20,000,000 worth of our common stock from time to time through Maxim
acting as agent, subject to certain limitations, including the maximum offering amount of securities registered under the registration
statement to which this prospectus supplement relates. The sales, if any, of shares made under the engagement agreement, will be made
by any method that is deemed an “at-the-market” offering as defined in Rule 415 promulgated under the Securities Act, including
by means of ordinary brokers’ transactions at market prices, in block transactions or as otherwise agreed by Maxim and us. We may
instruct Maxim not to sell common stock if the sales cannot be effected at or above the price designated by us from time to time. We
or Maxim may suspend the offering of common stock upon notice and subject to other conditions. As an agent, Maxim will not engage in
any transactions that stabilize the price of our common stock.
Each
time we wish to issue and sell common stock under the engagement agreement, we will notify Maxim of the number of shares to be issued,
the dates on which such sales are anticipated to be made, any minimum price below which sales may not be made and other sales parameters
as we deem appropriate. Once we have so instructed Maxim, unless Maxim declines to accept the terms of the notice, Maxim has agreed to
use its commercially reasonable efforts consistent with its normal trading and sales practices to sell such shares up to the amount specified
on such terms. The obligations of Maxim under the engagement agreement to sell our common stock is subject to a number of conditions
that we must meet.
We
will pay Maxim commissions for its services in acting as agent in the sale of common stock. Maxim will be entitled to a commission equal
to 3.0% of the gross proceeds from the sale of the common stock offered hereby. In addition, we have agreed to reimburse certain
expenses of Maxim in an amount not to exceed $30,000.
Settlement
for sales of common stock will occur on the second business day following the date on which any sales are made, or on some other date
that is agreed upon by us and Maxim in connection with a particular transaction, in return for payment of the net proceeds to us. There
is no arrangement for funds to be received in an escrow, trust or similar arrangement.
In
connection with the sale of the common stock on our behalf, Maxim may, and will with respect to sales effected in an “at the market
offering,” be deemed to be an “underwriter” within the meaning of the Securities Act and the compensation of Maxim
may be deemed to be underwriting commissions or discounts. We have agreed to provide indemnification and contribution to Maxim against
certain civil liabilities, including liabilities under the Securities Act. We have also agreed to reimburse Maxim for certain other specified
expenses.
The
offering pursuant to the engagement agreement will terminate upon the sale of all shares of common stock subject to the engagement agreement.
To the extent required by Regulation M, Maxim will not engage in any market making activities involving our common stock while the offering
is ongoing under this prospectus supplement.
INCORPORATION
BY REFERENCE OF CERTAIN DOCUMENTS
The
SEC allows us to “incorporate by reference” in this prospectus supplement and the accompanying base prospectus certain information
we file with the SEC, which means that we may disclose important information in this prospectus supplement and the accompanying base
prospectus by referring you to the document that contains the information. The information incorporated by reference is considered to
be an integral part of this prospectus supplement and the accompanying base prospectus, and information that we file later with the SEC
will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings
made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, until the termination of
the offering:
|
|
●
|
our
Annual Report on Form 10-K for the fiscal year ended June 30, 2020, filed with the SEC on October 1, 2020;
|
|
|
●
|
our
Quarterly Reports on Form 10-Q for the quarters ended September 30, 2020, December 31, 2020, and March 31, 2021 filed with the SEC
on November 16, 2020, February 16, 2021, and May 17, 2021 respectively;
|
|
|
●
|
our
Current Reports on Form 8-K or 8-K/A filed with the SEC on July 10, 2020, August 6, 2020, August 17, 2020, September 3, 2020, September 9, 2020, October 16, 2020, November 24, 2020, December 8, 2020, December 17, 2020, December 21, 2020, January 22, 2021, January 27, 2021,
February 12, 2021, February 16, 2021, February 16, 2021, March 1, 2021, March 31, 2021, March 31, 2021, May 26, 2021, May 28, 2021, June 1, 2021, June 7, 2021, July 15, 2021, August 12, 2021, and August 12, 2021;
|
|
|
●
|
the description of our common stock set forth in the registration statement
on Form 8-A, filed with the Securities and Exchange Commission on April 2, 2020, including any amendments or reports filed for the purposes
of updating this description; and
|
|
|
●
|
all
documents filed by us with the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended,
on or after the date of this prospectus supplement and before we stop offering the securities covered by this prospectus supplement
and the accompanying base prospectus.
|
Notwithstanding
the foregoing, information and documents that we elect to furnish, but not file, or have furnished, but not filed, with the SEC in accordance
with SEC rules and regulations is not incorporated into this prospectus supplement and the accompanying base prospectus and does not
constitute a part hereof.
WHERE
YOU CAN FIND MORE INFORMATION
We
are subject to the information reporting requirements of the Securities Exchange Act of 1934, as amended. Accordingly, we file annual,
quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over
the Internet at the SEC’s web site at www.sec.gov. Also, using our website, www.esportsentertainmentgroup.com, you can access
electronic copies of documents we file with the SEC, including our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current
Reports on Form 8-K, and any amendments to those reports, free of charge. Information on our website is not incorporated by reference
in this prospectus supplement or the accompanying base prospectus.
LEGAL
MATTERS
The
validity of the shares of common stock offered under this prospectus supplement and the accompanying base prospectus will be passed upon
for us by Lucosky Brookman LLP, New York, New York. Maxim is being represented by Pryor Cashman LLP, New York, New York.
EXPERTS
The
financial statements incorporated in this Prospectus Supplement by reference to the Annual Report on Form 10-K for the year ended June
30, 2020 have been so incorporated in reliance on the report of Rosenberg Rich Baker Berman P.A., independent registered public accounting
firm, given on the authority of said firm as experts in auditing and accounting.
PROSPECTUS
ESPORTS
ENTERTAINMENT GROUP, INC.
$100,000,000
Common
Stock
Preferred
Stock
Debt
Securities
Warrants
Rights
Units
We
may offer and sell up to $100 million in the aggregate of the securities identified above from time to time in one or more offerings.
This prospectus provides you with a general description of the securities.
Each
time we offer and sell securities, we will provide a supplement to this prospectus that contains specific information about the offering
and the amounts, prices and terms of the securities. The supplement may also add, update or change information contained in this prospectus
with respect to that offering. You should carefully read this prospectus and the applicable prospectus supplement before you invest in
any of our securities.
We
may offer and sell the securities described in this prospectus and any prospectus supplement to or through one or more underwriters,
dealers and agents, or directly to purchasers, or through a combination of these methods. If any underwriters, dealers or agents are
involved in the sale of any of the securities, their names and any applicable purchase price, fee, commission or discount arrangement
between or among them will be set forth, or will be calculable from the information set forth, in the applicable prospectus supplement.
See the sections of this prospectus entitled “About this Prospectus” and “Plan of Distribution” for more information.
No securities may be sold without delivery of this prospectus and the applicable prospectus supplement describing the method and terms
of the offering of such securities.
INVESTING
IN OUR SECURITIES INVOLVES RISKS. SEE THE “RISK FACTORS” ON PAGE 11 OF THIS PROSPECTUS AND ANY SIMILAR SECTION CONTAINED
IN THE APPLICABLE PROSPECTUS SUPPLEMENT CONCERNING FACTORS YOU SHOULD CONSIDER BEFORE INVESTING IN OUR SECURITIES.
Our
common stock and Unit A Warrants are quoted for trading on The NASDAQ Capital Market under the symbols “GMBL” and “GMBLW”,
respectively. On January 22, 2021, the last reported sale price of our common stock and Unit A Warrants on The NASDAQ Capital Market
was $7.47, and $4.33, per share, and Unit A Warrant, respectively.
The
aggregate market value of our outstanding common stock held by non-affiliates is $77,654,751.25 based on 14,186,740 shares of outstanding
common stock, of which 4,294,415 are held by affiliates, and a per share price of $7.85 based on the closing sale price of our common
stock on January 20, 2020. Pursuant to General Instruction I.B.6 of Form S-3, in no event will we sell our common stock in a public primary
offering with a value exceeding more than one-third of our public float in any 12-month period so long as our public float remains below
$75,000,000. We have not offered any securities pursuant to General Instruction I.B.6. of Form S-3 during the prior 12 calendar month
period that ends on and includes the date of this prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The
date of this prospectus is February 5, 2021.
TABLE
OF CONTENTS
ABOUT
THIS PROSPECTUS
This
prospectus is part of a registration statement that we filed with the U.S. Securities and Exchange Commission, or the SEC, using a “shelf”
registration process. By using a shelf registration statement, we may sell securities from time to time and in one or more offerings
up to a total dollar amount of $100 million as described in this prospectus. Each time that we offer and sell securities, we will provide
a prospectus supplement to this prospectus that contains specific information about the securities being offered and sold and the specific
terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus with respect
to that offering. If there is any inconsistency between the information in this prospectus and the applicable prospectus supplement,
you should rely on the prospectus supplement. Before purchasing any securities, you should carefully read both this prospectus and the
applicable prospectus supplement, together with the additional information described under the heading “Where You Can Find More
Information; Incorporation by Reference.”
We
have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent
information, you should not rely on it. We will not make an offer to sell these securities in any jurisdiction where the offer or sale
is not permitted. You should assume that the information appearing in this prospectus and the applicable prospectus supplement to this
prospectus is accurate as of the date on its respective cover, and that any information incorporated by reference is accurate only as
of the date of the document incorporated by reference, unless we indicate otherwise. Our business, financial condition, results of operations
and prospects may have changed since those dates.
When
we refer to “Esports,” “EEG,” “we,” “our,” “us” and the “Company”
in this prospectus, we mean Esports Entertainment Group, Inc., unless otherwise specified. When we refer to “you,” we mean
the holders of the applicable series of securities.
WHERE
YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE
Available
Information
We
file reports, proxy statements and other information with the SEC. Information filed with the SEC by us can be inspected and copied at
the Public Reference Room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of this information
by mail from the Public Reference Room of the SEC at prescribed rates. Further information on the operation of the SEC’s Public
Reference Room in Washington, D.C. can be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains a web site that contains
reports, proxy and information statements and other information about issuers, such as us, who file electronically with the SEC. The
address of that website is http://www.sec.gov.
Our
website address is https://esportsentertainmentgroup.com. The information on our website, however, is not, and should not be deemed
to be, a part of this prospectus.
This
prospectus and any prospectus supplement are part of a registration statement that we filed with the SEC and do not contain all of the
information in the registration statement. The full registration statement may be obtained from the SEC or us, as provided below. Forms
of the documents establishing the terms of the offered securities are or may be filed as exhibits to the registration statement. Statements
in this prospectus or any prospectus supplement about these documents are summaries and each statement is qualified in all respects by
reference to the document to which it refers. You should refer to the actual documents for a more complete description of the relevant
matters. You may inspect a copy of the registration statement at the SEC’s Public Reference Room in Washington, D.C. or through
the SEC’s website, as provided above.
Incorporation
by Reference
The
SEC’s rules allow us to “incorporate by reference” information into this prospectus, which means that we can disclose
important information to you by referring you to another document filed separately with the SEC. The information incorporated by reference
is deemed to be part of this prospectus, and subsequent information that we file with the SEC will automatically update and supersede
that information. Any statement contained in a previously filed document incorporated by reference will be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained in this prospectus modifies or replaces that statement.
We
incorporate by reference our documents listed below and any future filings made by us with the SEC under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, which we refer to as the “Exchange Act” in this prospectus, between
the date of this prospectus and the termination of the offering of the securities described in this prospectus. We are not, however,
incorporating by reference any documents or portions thereof, whether specifically listed below or filed in the future, that are not
deemed “filed” with the SEC, including any information furnished pursuant to Items 2.02 or 7.01 of Form 8-K or related exhibits
furnished pursuant to Item 9.01 of Form 8-K.
This
prospectus and any accompanying prospectus supplement incorporate by reference the documents set forth below that have previously been
filed with the SEC:
|
|
●
|
Our
Annual Report on Form 10-K for the year ended June 30, 2020, filed with the SEC on October 1, 2020;
|
|
|
|
|
|
|
●
|
Our
Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, filed with the SEC on November 16, 2020;
|
|
|
|
|
|
|
●
|
Our
Current Reports on Form 8-K and/or 8-K/A filed with the SEC on August 6, 2020, October 16, 2020, November 24, 2020, December 8, 2020,
December 17, 2020, and January 22, 2021; and
|
|
|
|
|
|
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●
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The
description of our Common Stock contained in our Registration Statement on Form S-8, filed with the SEC on November 25, 2020, as
amended, and any amendment or report filed with the SEC for the purpose of updating the description.
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All
reports and other documents we subsequently file pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of this offering, including all such documents we may file with the SEC after the date of the initial registration statement and prior
to the effectiveness of the registration statement, but excluding any information furnished to, rather than filed with, the SEC, will
also be incorporated by reference into this prospectus and deemed to be part of this prospectus from the date of the filing of such reports
and documents.
THE
COMPANY
Corporate
History
Esports
Entertainment Group, Inc. was formed in the State of Nevada on July 22, 2008 under our prior name Virtual Closet, Inc. Virtual Closet,
Inc. changed its name to DK Sinopharma, Inc. on June 6, 2010. DK Sinopharma, Inc. changed its name to VGambling, Inc. on August 12, 2014.
On or about April 24, 2017, VGambling, Inc. changed its name to Esports Entertainment Group, Inc. Our company was engaged in a number
of different enterprises up until May 20, 2013, when, pursuant to the terms of the Share Exchange Agreement, we acquired all of the outstanding
capital stock of H&H Arizona Corporation in exchange for 3,333,334 shares of our common stock. From May 2013 until August 2018, our
operations were limited to designing, developing and testing our wagering systems. We launched our online esports wagering website (www.vie.gg)
in August 2018.
Business
Overview
Esports
is the competitive playing of video games by amateur and professional teams for cash prizes. Esports typically takes the form of organized,
multiplayer video games that include real-time strategy, fighting, first-person shooter and multiplayer online battle arena games. During
2020, the three largest selling esports games were Dota 2, League of Legends (each multiplayer online battle arena games) and
Counter Strike: Global Offensive (a first-person shooter game). Other popular games include Smite, StarCraft II,
Call of Duty¸ Heroes of the Storm, Hearthstone and Fortnite. Esports also includes games which can
be played, primarily by amateurs, in multiplayer competitions on the Sony PlayStation, Microsoft Xbox and Nintendo Switch. Most major
professional esports events and a wide range of amateur esports events are broadcast live via streaming services including twitch.tv,
azubu.tv, ustream.tv and youtube.com.
We
are an esports entertainment and online gambling company primarily focused on three verticals, (i): esports entertainment, (ii) esports
wagering, and (iii) iGaming and traditional sports betting. We believe focusing on these verticals positions the Company to take advantage
of a trending and expanding marketplace in esports with the rise of competitive gaming as well as the legalization of online gambling
in the United States.
Esports
Entertainment:
Our
esports entertainment vertical includes any activity that we pursue within esports that does not include real-money wagering. Right now,
the main component of this vertical is our skill-based tournament platform. This allows us to engage and monetize players across 41 states
where skill-based gambling is legal as well as create relationships with players that can eventually migrate to our Vie.gg real-money
wagering platform.
Esports
Wagering:
We
intend to be a leader in the large and rapidly growing sector of esports real-money wagering. Our Vie.gg platform offers fans the ability
to wager on professional esports events in a licensed and secure environment. At the current time, under the terms of our existing Curacao
license, we are currently able to accept wagers from residents of over 149 jurisdictions including Canada, Japan, Germany and South Africa.
On April 30, 2020, we received our gaming service license from the Malta Gaming Authority (MGA). We now expect that residents in a number
of European Union member states will be able to place bets on our website. On August 20, 2020, we announced that we entered into a multi-year
partnership with Twin River Worldwide Holdings, Inc (NYSE: TRWH) to launch our proprietary mobile sports betting product in the state
of New Jersey. We intend to have our platform live in the state by the end of the first quarter of 2021.
iGaming
and Traditional Sports Betting:
The
goal of our iGaming and traditional Sports Betting vertical is to provide profitable growth and access to strategic licenses in jurisdictions
that we can cross-sell into our Vie.gg platform. On July 7, 2020, we entered into a stock purchase agreement (the “Argyll Purchase
Agreement”), by and among the Company, LHE Enterprises Limited (“LHE”), and AHG Entertainment, LLC (“AHG”)
whereby, upon closing on July 31, 2020, the Company acquired all of the outstanding capital stock of LHE and its subsidiaries, (i) Argyll
Entertainment AG, (ii) Nevada Holdings Limited and (iii) Argyll Productions Limited (collectively the “Acquired Companies”
or “Argyle”). AHG is licensed and regulated by the UK Gambling Commission and the Irish Revenue Commissioners to operate
online sportsbook and casino sites in the UK and Ireland, respectively. Argyll has a flagship brand, www.SportNation.bet, as well
as two white label brands, www.RedZone.bet and www.uk.Fansbet.com (collectively the “Argyll Brands”), with
over 250K registered players at the end of calendar year 2020.
Competitive
Advantages/Operational Strengths
We
believe the following strengths position us for sustainable growth:
Management
Team and Key Personnel Experience: Our Board includes senior managers with extensive experience in online gambling, esports,
information technology, compliance, regulation, accounting and finance. Our Officers and management include individuals with extensive
experience in online gambling, esports, information technology, marketing, business development, payment processing, compliance, regulation,
accounting, finance and customer service.
Licensed
Technology/Proprietary B2C wagering platform: We have entered into a White Label Services Agreement dated December 12, 2019 (the
“Askott Agreement”) with a subsidiary of Askott Entertainment Inc. (“Askott”) whereby Esports has secured a non-exclusive
license to “white label” Askott’s proprietary software and systems as the platform through which we run our business
(the “Platform”). The Platform requires complex code and very skilled development. Accordingly, we believe the complexity
of our Platform offers a higher barrier to entry than standard wagering platforms. Furthermore, in September 10, 2020, we acquired certain
intellectual property assets developed by FLIP Sports (“Flip Sports”). As part of the acquisition of assets, the Flip employees
became employees of Argyll Productions Ltd, a subsidiary of LHE, with the intention to have them build a best-in-class proprietary esports
wagering platform. We believe our proprietary platform will provide us with a competitive advantage as it offers what we believe to be
the widest variety of betting options available for esports wagering.
Argyll’s
“Rewards” Program: built in-house, and in conjunction with FLIP Sports, provides an industry-leading customer loyalty
program, driving above-industry customer retention rates and player lifetime values. The Program helped earn Argyll the Innovative Start-up
of the Year award, at the 2018 EGR Marketing & Innovation Awards. We believe the platform can be leveraged across all of our verticals.
Affiliate
Marketing Program: Our affiliate marketing program focuses on professional esports teams and individual social media influencers.
As part of our efforts to market our online gaming services, we attempt to enter into “Affiliate Marketing Agreements” with
professional esports teams and other influential individuals and groups within esports. As an “Marketing Affiliate”, the
esports team will provide their fans with a link to our online gaming website, where the fan, if located in a country which allows the
fan to place a bet using our gaming platform, can bet on teams playing in esports tournaments. For a player placing a bet through the
marketing affiliate’s link to our website and provided such player wins the bet, we pay the “Marketing Affiliate” a
percentage of the amount we collect from the winning bet (typically between 25% - 35%).
Growth
Strategy
In
the future, we intend to:
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expand
our Esports services into more of the 41 states where skill-based gambling is legal, enhance the Product offering, as well as create
relationships with players that will migrate into our Vie.gg real-money wagering platform.
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expand
our Esports Wagering services into more jurisdictions, utilizing the recently acquired MGA gaming license, as well as the recent
multi-year partnership with Twin River Worldwide Holdings, Inc (NYSE: TRWH) to launch our proprietary mobile sports betting product
in the state of New Jersey.
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continue
with our M&A strategy in the iGaming and Traditional Sports Betting space, to acquire profitable Operators in different jurisdictions,
that will also allow for cross-pollination of services (Sportsbook, Casino and Esports).
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Future
Products and Services:
Online
Esports Tournament Play
We
intend to offer players from around the world, including the United States (except in 13 states in the US and other jurisdictions outside
the US which currently prohibit playing games of skill for cash prizes), the ability to enter and participate in online video game tournaments
and win cash prizes. Online esports tournament play consists of two or more people playing against each other in a game from their personal
phones or computers, where such players do not necessarily have to be playing in real time. These events could be held over the course
of a day, a week or even a month and the winner will be the one with the top score or the fastest time at the conclusion of the event.
Cash-based tournaments involving games of skill are not considered gambling in most U.S. states because the generally accepted definition
of gambling involves three specific things: (1) the award of a prize, (2) paid-in consideration (meaning entrants pay to compete) and
(3) an outcome determined on the basis of chance. As a result, games of skill are not generally subject to the same laws and regulations
as our esports event wagering service. We expect participants in our tournaments being able to enter and play against each other with
prize money distributed to the last remaining competitors. We anticipate collecting a tournament entry fee for our tournaments, as well
as a percentage of total winnings that are paid to users (typically 10% of the entry fees) and thus none of our money will be at risk
or otherwise dependent on the outcome. We intend to offer users a wide selection of video games of skill to be played online for real
money in small groups to major tournaments. The tournament platform will also serve as a tool to help us determine which markets we are
finding the most esports players. We believe using the tournament platform to penetrate the US market will allow us to grow our brand
within the esports community and lead to lower customer-acquisition-costs for our wagering platform.
US
Market Expansion
Currently
we do not offer players in the US the ability to wager on our Vie.gg platform. However, on August 20, 2020, we announced that we entered
into a multi-year partnership with Twin River Worldwide Holdings, Inc (NYSE: TRWH) to launch our proprietary mobile sports betting product
in the state of New Jersey. We intend to have our platform live in the state by the end of the first quarter of 2021. Following our launch
in New Jersey, we intend to evaluate additional jurisdictions in the US that could be commercially viable for further expansion of our
Vie.gg platform.
International
Market Expansion
We
received a Gaming Service License for online pool betting from the Malta Gaming Authority in April 2020, established a brick and mortar
office in such jurisdiction and anticipate commencing online gaming operations in that jurisdiction in 2020, both on the Vie.gg and Argyll
Brands. We expect that residents of a number of both European Union and non-EU countries will be able to place bets on our website. In
the future, we may consider obtaining additional country specific gaming licenses should we determine there is sufficient local demand
for our services in these markets. In order to effectively penetrate international markets, we intend to translate our website into several
additional languages and offer customer service and technical support in the local language of key markets.
Our
Online Wagering Platforms
According
to Zion Market Research’s, Online Gambling & Betting Market by Game Form (Poker, Casino, Sports Betting, Bingo, Lottery, Horse
Racing Betting, and Others) and by Component (Hardware, Software, and Service): Global Industry Perspective, Comprehensive Analysis and
Forecast, 2017 – 2024, the online gambling market represents one of the fastest growing segments of the gambling industry. Zion
Market estimated the size of the global online gambling market in 2018 was in excess of US$45.8 billion and is projected to reach US$94.4
billion by 2024.
Although
the Vie.gg brand is focused solely on offering online wagering on the widest range of esports events broadcast from around the world,
the Argyll Brands offer online users traditional casino style games such as poker, craps or slots, as well as offering online wagering
on traditional sporting events such as soccer, horse racing and football.
All
persons 18 years and older can presently place bets on our online gambling website at www.vie.gg except for residents of the United States
and other jurisdictions that the Company is precluded from supplying its services to pursuant to its gaming licenses.
With
respect to our Argyll Brands, wagering is only permitted by customers in the United Kingdom and Republic of Ireland.
On
April 30, 2020, the Company received its Gaming Service License for online pool betting from the Malta Gaming Authority. This allows
residents of certain European Union member countries to place bets on our website.
Once
on our websites, a player can place a bet on a team participating in any number of tournaments which are scheduled to be held in the
upcoming weeks. We also maintain a “how to play” section on the website which provides players with instructional videos
on placing bets as well as other pieces of information that may be beneficial to an inexperienced player or a new user of our website.
Additionally, we maintain a “frequently asked questions” section which provides our customers with the ability to easily
navigate general questions relating to the website, personal account information, payment processing, betting rules and procedures as
well as tips.
We
have agreements with the following third party companies that provide us with certain services that enable our website to function efficiently:
Money
Matrix. MoneyMatrix provides us with the software we use to receive payments from players. Using MoneyMatrix, a player can select
from over 150 payment options (i.e. Skrill, Astropay) to deposit funds with us for use in placing bets.
Partner
Matrix. Partner Matrix provides us with the software we use to track players placing a bet through an Affiliate’s link to our
website.
Money
Matrix, Partner Matrix are both paid monthly for their services to the Company.
Askott
Entertainment Inc. The Vie.gg Platform is hosted from Askott Entertainment Inc., who provides us with a website hosting subscription,
and provides e-games, development and IT services related to the software interface and web design. We will pay the Askott subsidiary
a percentage on gaming revenues, this percentage varies based on the amount of monthly gaming revenues generated but shall not exceed
twenty-percent (20%) of monthly gaming revenues but gradually decreases based on increased revenues. Additionally, we will pay Askott
a minimum monthly fee of $9,000 EUR for services which amount will be subject to increase based on the number of games made available
on the Platform.
SB
Tech Global – the Argyll Brands use the SB Tech platform to host their websites, and pay a percentage on both Sportsbook and
Casino Gross Gaming revenues, as well as certain hosting and data feed fees.
Marketing
and Sales Initiatives
The
Company has several sponsorship marketing agreements in place for its website as well as an extended marketing agreement with Dignitas,
an esports brand owned by Harris Blitzer sports and entertainment with multiple professional teams playing several titles with over a
million fans worldwide. The Company also has an agreement with Allied Esports to run esports tournaments to promote the brand globally
to esports fans.
We
are looking to expand into new geographic territories by obtaining licenses to operate in those territories. The need for hands-on implementation
in these territories and support will require investment in additional marketing activities, offices, and other overhead.
We
will also accelerate our expansion if we find complementary businesses that we are able to acquire in other markets. Our marketing efforts
to expand into new territories have included esports team and tournament sponsorship, affiliate marketing, social media advertising,
content creation, and attendance at esports and gaming events in addition to personal contact with other industry leaders.
Esports
games are played by professional teams, amateur teams, and individuals. Professional esports teams have their own social media presence,
with some of the top professional teams having millions of fans who follow and interact with the team on a regular basis. A website of
a professional esports team usually contains specific information about the team and lists upcoming tournaments or events in which the
team will be participating. As part of our efforts to market our online gaming services, we attempt to enter into affiliate marketing
agreements with professional Esports teams.
As
a marketing affiliate, the esports team will promote our brand in the content they create and on their social media and Website. The
fans will be provided with a link to our online gaming website, where the Fan, if located in a country that allows the fan to place a
bet using our gaming platform, can bet on teams playing in esports tournaments. For a player placing a bet through the team’s link
to our website (and provided the player won the bet), we pay the Affiliate a percentage of the amount we collect from the winning bet.
As of December 1, 2020, we had more than 75 esports teams agreeing to act as our marketing affiliates.
We
plan to increase our marketing efforts and awareness of our websites, www.vie.gg and www.sportnation.bet, as well as future
offerings by:
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Educating
sports betting consumers to bet on esports and we want gamers to start betting on esports.
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Sponsoring
professional esports teams and tournaments that have a global reach.
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Working
with sports and gaming celebrities and social media influencers who have an interest in video games and esports to generate new customers.
We intend to increase our efforts in attracting esports players and other celebrities who have an interest in video games and esports.
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Using
a multichannel approach focused on acquiring and retaining customers we intend to utilize multiple social media platforms to promote
the Company’s wagering business including, but not limited to, Facebook Twitter, Instagram, Snapchat, TikTok, Youtube, Twitch,
Whatsapp, QQ, WeChat, email and SMS messages and using online advertisements, paid search optimization, and various social media
campaigns to increase our online presence and drive traffic to our website. We intend to increase our investments in online advertisements,
including esports gambling-related websites. We also intend to continue to invest in optimizing the Company’s website so it
will attain a high ranking under key search words or phrases, such as “esports gambling.”
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Competition
The
online gambling and wagering industry is increasingly competitive. With relatively low barriers to entry, new competitors are entering
the esports wagering and video game tournament segments. In both of these segments, there currently exist several major competitors.
Because many of these competitors focus on delivering one product, as opposed to a full suite of esports and video gambling products
and services that we intend to offer, the competitors may offer an equivalent or superior product to that of the Company. We expect the
number of companies offering products and services in each market segment to increase. Most of our current competitors, including Unikrn,
bet365, William Hill, Betway, and Pinnacle Sports, have far greater resources than we have.
In
the UK, where Argyll is heavily concentrated, the competition in the online gambling industry is extremely competitive. As of June 2020,
the UK Gambling Commission oversaw 3,641 gambling licenses, held by 2,652 gaming operators, which makes competing for the acquisition
and retention of customers, continually challenging.
We
believe the following differentiates us from our competitors:
The
Vie.gg brand is focused solely on esports gambling and 18+ gaming. We will not offer users traditional casino style games like poker,
craps or slots nor do we anticipate offering wagering on traditional sporting events like football or soccer. We are focused solely on
delivering the widest selection of content and offering the widest range of esports events all for real-money wagering.
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Strength
of Argyll proposition:
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With
the industry reaching saturation point with similar offers around bonuses and free bets, often with complex terms and conditions, Argyll’s
vision and ambition was to launch a totally unique in-house product, seamlessly in to SportNation.bet, to provide customers with an experience
like no other, while tackling one of the major challenges that any operator faces; retention. That product and concept is our Rewards
Program.
Argyll’s
Rewards Program offers customers a simple and genuinely rewarding loyalty scheme, where every bet on the site, win, lose or draw, earns
points to redeem into our “Reward Store”. No turnover requirements, no minimum odds conditions, no new customer or single-use
restrictions.
We
have developed an in house, turnover based model to reward customers with points based on their activity. Customers earn points faster
by increasing the number of selections in sportsbook bets, providing an opportunity to increase the rate at which points are earned.
Customers
are able to select when and how they want to redeem. A customer is not bound to certain activity or staking criteria. A customer can
decide when and what they want to redeem, which could either be frequently, or allowing customers to save for a larger item.
As
an extension to the already unique Rewards offering that SportNation provides its users, a range of product enhancements have also been
integrated in to SportNation, including live streaming, responsible gaming and compliance tools and data driven customized journeys.
All integrations have been designed and developed in house, to align with the feel and tone of the site. By combining research and insight
with the latest technology to implement real time solutions, SportNation offers an innovative, safe and responsible product that is tailored
to each individual user, on and offsite, from registration and throughout their customer lifetime.
Regulations
Affecting our Business
The
offering and operation of online real-money gambling platforms and related software and solutions is subject to extensive regulation
and approval by various national, federal, state, provincial, tribal and foreign agencies (collectively, “gaming authorities”).
Gambling laws require us to obtain licenses or findings of suitability from gaming authorities for Esports Entertainment, including each
of our subsidiaries engaged in these activities, and certain of our directors, officers, employees and in some instances, significant
shareholders (typically beneficial owners of more than 5% of a company’s outstanding equity). The criteria used by gambling authorities
to make determinations as to qualification and suitability of an applicant varies among jurisdictions, but generally require the submission
of detailed personal and financial information followed by a thorough and sometimes lengthy investigation. Gaming authorities have broad
discretion in determining whether an applicant qualifies for licensing or should be found suitable. Gambling authorities generally look
to the following criteria when determining to grant a license or finding of suitability, including (i) the financial stability, integrity
and responsibility of the applicant, (ii) the quality and security of the applicant’s online real-money platform and gaming equipment
and related software, as applicable, and (iii) the past history of the applicant. Gambling authorities may, subject to certain administrative
proceeding requirements, (i) deny an application, or limit, condition, restrict, revoke or suspend any license, registration, finding
of suitability or approval, and (ii) fine any person licensed, registered or found suitable or approved. Notwithstanding the foregoing,
some jurisdictions explicitly prohibit gaming in all or certain forms and we will not market our gambling services in these jurisdictions.
If any director, officer or employee of ours fails to qualify for a license or is found unsuitable (including due to the failure to submit
the required documentation) by a gaming authority, we may deem it necessary, or be required to, sever our relationship with such person,
which may include terminating the employment of any such person. Gambling authorities have the right to investigate any individual or
entity having a material relationship with us, to determine whether such individual or entity is suitable or should be licensed to do
business as a business associate of ours. In addition, certain gambling authorities monitor the activities of the entities they regulate
both in their respective jurisdiction and in other jurisdictions to ensure that these entities are in compliance with local standards
on a worldwide basis.
On
May 14, 2018, the Supreme Court of the United States struck down the Professional and Amateur Sports Protection Act, a 1992 law that
barred state-authorized sports gambling with some exceptions and made Nevada the only state where a person could wager on the results
of a single game. Since the Supreme Court’s decision, sports gambling has commenced in several states and several more states have
enabling legislation pending. We believe that the Supreme Court’s decision will allow our platform to be used in the United States
at some point in the future. We plan to explore expansion of our esports online wagering platform into the US market place at the appropriate
time.
The
Unlawful Internet Gambling Enforcement Act of 2006 (“UIEGA”) made it a federal offense, punishable by up to five years in
prison, for a business to accept payments “in connection with the participation of another person in unlawful internet gambling.”
In support of such new prohibitions, the UIGEA uses a variety of terms — some of which are ambiguous or undefined. Initially, the
UIGEA broadly defines a “bet or wager” as: the staking or risking by any person of something of value upon the outcome of
a contest of others, a sporting event, or a game subject to chance, upon an agreement or understanding that the person or another person
will receive something of value in the event of a certain outcome.
Further,
a “bet or wager” specifically includes a chance on a lottery or prize awarded predominantly by chance; a “scheme”
as defined in Title 28, U.S.C. § 3702 relating to government-sponsored amateur or professional sports betting and, “any instructions
or information pertaining to the establishment or movement of funds by the bettor or customer in, to, or from, an account with the business
of betting or wagering.” While this final prohibition incorporates the term “business of betting or wagering,” that
term is not specifically defined anywhere in the UIGEA. The only reference to that term comes in § 5362(2), which states: The term
“business of betting or wagering” does not include the activities of a financial transaction provider, or any interactive
computer service or telecommunications service.
Nonetheless,
the law does contain specific prohibitions. In order to establish a violation of the UIGEA, it must be shown that:
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“person” was engaged in the business of betting or wagering;
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person knowingly accepted a financial instrument or proceeds thereof; and
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That
instrument was accepted (by the person) in connection with the participation of another person in “unlawful Internet gambling.”
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In
the context of this statute “unlawful Internet gambling” is defined as follows:
To
place, receive, or otherwise knowingly transmit a bet or wager by any means which involves the use, at least in part, of the Internet
where such bet or wager is unlawful under any applicable Federal or State law in the state or tribal lands in which the bet or wager
is initiated, received, or otherwise made.
Therefore,
the UIGEA only applies to online gambling transactions that are already prohibited by other state, federal, or tribal laws. Therefore,
in order for the financial transaction to be prohibited by § 5363 of the UIGEA, the bet or wager must be “initiated, received,
or otherwise made” in a place where such activity (the bet of wager) violates preexisting state, federal, or tribal law.
At
the current time, we are able to accept wagers on our vie.gg website from residents of over 149 jurisdictions including Canada, Japan,
Germany and South Africa. We do not accept wagers from United States residents at this time and therefore the bet or wager on our platform
is not “initiated, received, or otherwise made” in a place where such activity violates preexisting state, federal, or tribal
law.
Great
Britain
Betting
and gaming with respect to customers in Great Britain (England, Scotland and Wales, but excluding Northern Ireland, the Channel Islands
and the Isle of Man) is regulated by the Gambling Act 2005 (the “2005 Act”). The 2005 Act established the Gambling Commission
as the regulator responsible for granting licenses to operate gambling services as well as overseeing compliance with applicable law
and regulation. In 2014, the UK Parliament passed the Gambling (Licensing and Advertising) Act 2014, which required all remote gambling
operators serving customers in Great Britain or advertising in Great Britain to obtain a license from the Gambling Commission. Our Argyll
Brands operate in the UK pursuant to remote operating licenses issued by the Gambling Commission along with the separate software and
“key personnel” individual licenses. Various additional operating subsidiaries of EEG are endorsed upon the licenses and
are hence authorized to carry out the licensed activities on a so-called “umbrella” basis in addition to the “primary”
licensee. The terms of these operating licenses require that the relevant subsidiaries of EEG must source all gambling software used
in connection with British players from the holder of a gambling software licenses issued by the Gambling Commission. So long as the
applicable license fees are paid and the British licenses are not suspended, revoked or otherwise surrendered, EEG expects that the licenses
will remain valid indefinitely.
British
regulations require licensed companies to file quarterly returns as well as a more extensive “annual assurance statement”
to provide the Gambling Commission with information regarding matters such as significant changes in control systems, risk management
and governance since the last assurance statement, how the licensee is addressing gambling by problem and at-risk customers and any improvements
that the licensee plans to implement to its control systems, risk management and governance and/or its approach to addressing problem
and at-risk gambling and promoting socially responsible gambling. The Gambling Commission also subjects its licensees to periodical regulatory
compliance visits subsequent to which recommendations may be issued to the licensee.
Intellectual
Property
We
have not filed to register any patents, trade names or trademarks in any jurisdictions in relation to our Vie.gg brand, but we do intend
to file applications to register patents, tradenames or trademarks in the near future.
Argyll
owns a European Union registered trade mark for its SportNation brand.
Our
Risks and Challenges
An
investment in our securities involves a high degree of risk. You should carefully consider the risks summarized below. The risks are
discussed more fully in the “Risk Factors” section of this prospectus immediately following this prospectus summary. These
risks include, but are not limited to, the following:
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We
are a development stage company with a limited operating history.
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The
gaming and interactive entertainment industries are intensely competitive. Esports faces competition from a growing number of companies
and, if Esports is unable to compete effectively, its business could be negatively impacted.
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We
have a history of accumulated deficits, recurring losses and negative cash flows from operating activities. We may be unable to achieve
or sustain profitability
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The
failure to enforce and maintain our intellectual property rights could enable others to use trademarks used by our business which
could adversely affect the value of the Company.
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The
Company may be subject to claims of intellectual property infringement or invalidity and adverse outcomes of litigation could unfavorably
affect its operating results.
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Compromises
of the Company’s systems or unauthorized access to confidential information or EEG’s customers’ personal information
could materially harm EEG’s reputation and business.
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There
is a risk that the Company’s network systems will be unable to meet the growing demand for its online products.
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Systems,
network or telecommunications failures or cyber-attacks may disrupt the Company’s business and have an adverse effect on EEG’s
results of operations.
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Malfunctions
of third-party communications infrastructure, hardware and software expose Esports to a variety of risks Esports cannot control.
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Recent
Developments
Lucky
Dino Purchase Agreement
On
December 14, 2020, the Company, via its wholly owned subsidiary, Esports Entertainment (Malta) Limited (“EEL”), entered into
an asset purchase agreement (the “Lucky Dino Purchase Agreement”), by and among EEL, Lucky Dino Gaming Limited, a company
registered in Malta (“Lucky Dino”), and Hiidenkivi Estonia OU, a company registered in Estonia (“HEOU” and, together
with Lucky Dino, the “Sellers”) whereby EEL purchased and assumed from the Sellers substantially all the assets and assumed
certain specified liabilities of the Sellers’ business of real money online casino gaming (the “Acquired Business”).
As
consideration for the Acquired Business, the Company agreed to pay the Sellers EUR €25,000,000 (the “Lucky Dino Purchase Price”)
subject to certain adjustments set forth in the Lucky Dino Purchase Agreement.
The
Lucky Dino Purchase Agreement contains customary representations, warranties, covenants, indemnification and other terms for transactions
of this nature. The closing of the transactions contemplated by the Lucky Dino Purchase Agreement is subject to certain conditions, including,
among other things, the completion of an audit of Lucky Dino and HEOU.
Phoenix
Purchase Agreement
On
December 17, 2020, the Company entered into a share purchase agreement (the “Purchase Agreement”), by and among the Company,
Phoenix Games Network Limited, a company registered in England and Wales (“Phoenix”), and the shareholders of Phoenix (the
“Phoenix Shareholders” and, together with Phoenix, the “Selling Parties”), whereby the Company acquired from
the Selling Parties all of the issued and outstanding share capital of Phoenix (the “Phoenix Shares”). Pursuant to the Purchase
Agreement, as consideration for the Phoenix Shares, the Company agreed to pay the Sellers: (i) GBP £1,000,000 (the “Original
Cash Consideration”); and (ii) shares of common stock of the Company, par value $0.0001 per share, in the aggregate value of GBP£3,000,000
(the “Original Share Consideration” and, together with the Cash Consideration, the “Original Purchase Price”),
subject to adjustment based on certain revenue milestones as outlined therein.
On
January 21, 2021, the Company and Sellers, having met all conditions precedent, consummated the closing for the Phoenix Shares pursuant
to the terms of the Purchase Agreement. The Original Purchase Price was adjusted at closing and as consideration for the Phoenix Shares,
the Company paid the Sellers: (i) GBP £350,000 (US $493,495.35) (the “Closing Cash Consideration”); and (ii) 292,211
shares of common stock of the Company, par value $0.0001 per share (aggregate value of $1,927,647.49) (the “Closing Share Consideration”
and, together with the Cash Closing Consideration, the “Closing Purchase Price”). The Closing Cash Consideration was be paid
in US Dollars and was calculated in accordance with the applicable exchange rate on the Closing Date (as such term is defined in the
Purchase Agreement). The Sellers shall remain eligible to receive the remainder of the Original Purchase Price upon Phoenix meeting the
aforementioned Revenue Targets by May 16, 2021.
Pursuant
to the Purchase Agreement, the Selling Parties shall be entitled to receive an additional GBP£2,000,000 if Phoenix has reached
certain revenue milestones by the 18 month anniversary of the Closing Date as further outlined therein.
The
Purchase Agreement contains customary representations, warranties, covenants, indemnification and other terms for transactions of a similar
nature.
RISK
FACTORS
Investment
in any securities offered pursuant to this prospectus and the applicable prospectus supplement involves risks. You should carefully consider
the risk factors incorporated by reference to our Registration Statement on Form S-1, filed with the SEC on June 19, 2020, as amended,
our most recent Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q or Current Reports on Form 8-K we file after
the date of this prospectus, and all other information contained or incorporated by reference into this prospectus, as updated by our
subsequent filings under the Exchange Act, and the risk factors and other information contained in the applicable prospectus supplement
before acquiring any of such securities. The occurrence of any of these risks might cause you to lose all or part of your investment
in the offered securities.
SPECIAL
NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus contains forward-looking statements that involve risks and uncertainties, principally in the sections entitled “Risk
Factors.” All statements other than statements of historical fact contained in this prospectus, including statements regarding
future events, our future financial performance, business strategy and plans and objectives of management for future operations, are
forward-looking statements. We have attempted to identify forward-looking statements by terminology including “anticipates,”
“believes,” “can,” “continue,” “could,” “estimates,” “expects,”
“intends,” “may,” “plans,” “potential,” “predicts,” “should,”
or “will” or the negative of these terms or other comparable terminology. Although we do not make forward looking statements
unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. These statements are only predictions
and involve known and unknown risks, uncertainties and other factors, including the risks outlined under “Risk Factors” or
elsewhere in this prospectus, which may cause our or our industry’s actual results, levels of activity, performance or achievements
expressed or implied by these forward-looking statements.
Forward-looking
statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the
times at, or by which, that performance or those results will be achieved. Forward-looking statements are based on information available
at the time they are made and/or management’s good faith belief as of that time with respect to future events, and are subject
to risks and uncertainties that could cause actual performance or results to differ materially from what is expressed in or suggested
by the forward-looking statements.
Forward-looking
statements speak only as of the date they are made. You should not put undue reliance on any forward-looking statements. We assume no
obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting
forward-looking information, except to the extent required by applicable securities laws. If we do update one or more forward-looking
statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
USE
OF PROCEEDS
We
intend to use the net proceeds from the sale of the securities as set forth in the applicable prospectus supplement.
DESCRIPTION
OF CAPITAL STOCK
Introduction
In
the discussion that follows, we have summarized selected provisions of our certificate of incorporation, bylaws and the Nevada Revised
Statutes relating to our capital stock. This summary is not complete. This discussion is subject to the relevant provisions of Nevada
law and is qualified by reference to our certificate of incorporation and our bylaws. You should read the provisions of our certificate
of incorporation and our bylaws as currently in effect for provisions that may be important to you.
On
January 28, 2020, we effected a 1-for-15 reverse stock split of our outstanding common stock, which caused our then outstanding common
stock to decrease from 93,395,890 to 6,227,006 while keeping our authorized capitalization unchanged.
Authorized
Capital Stock
We
are currently authorized to issue up to 510,000,000 shares of capital stock consisting of: 500,000,000 shares of common stock, par value
$0.001 per share and 10,000,000 shares of preferred stock, par value of $0.001 per share. As of January 21, 2021, 14,186,740 shares of
common stock were issued and outstanding and there were no shares of preferred stock outstanding.
Common
Stock
We
are authorized to issue 500,000,000 shares of common stock. Holders of our common stock are each entitled to cast one vote for each share
held of record on all matters presented to the shareholders. Cumulative voting is not allowed; hence, the holders of a majority of our
outstanding common shares can elect all directors.
Holders
of our common stock are entitled to receive such dividends as may be declared by our board of directors out of funds legally available
and, in the event of liquidation, to share pro rata in any distribution of our assets after payment of liabilities. Our board of directors
is not obligated to declare a dividend. It is not anticipated that dividends will be paid in the foreseeable future.
Holders
of our common stock do not have preemptive rights to subscribe to additional shares if issued. There is no conversion, redemption, sinking
fund or similar provisions regarding the common stock. All outstanding shares of common stock are fully paid and non-assessable.
Preferred
Stock
We
are authorized to issue 10,000,000 shares of preferred stock. Shares of preferred stock may be issued from time to time in one or more
series as may be determined by our board of directors. The voting powers and preferences, the relative rights of each such series and
the qualifications, limitations and restrictions of each series will be established by the board of directors. Our directors may issue
preferred stock with multiple votes per share and dividend rights which would have priority over any dividends paid with respect to the
holders of our common stock. The issuance of preferred stock with these rights may make the removal of management difficult even if the
removal would be considered beneficial to shareholders generally, and will have the effect of limiting shareholder participation in transactions
such as mergers or tender offers if these transactions are not favored by our management. As of the date of this prospectus, we had not
issued any shares of preferred stock.
Unit
A Warrants
Exercisability.
The Unit A Warrants are exercisable immediately upon issuance and at any time up to the date that is five years from the date of
issuance. The Unit A Warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed
exercise notice accompanied by payment in full for the number of shares of our common stock purchased upon such exercise (except in the
case of a cashless exercise as discussed below). Unless otherwise specified in the warrant, the holder will not have the right to exercise
any portion of the warrant if the holder (together with its affiliates) would beneficially own in excess of 4.99% of the number of shares
of our common stock outstanding immediately after giving effect to the exercise (or, upon election by a Holder prior to the issuance
of any Unit A Warrants, 9.99%), as such percentage ownership is determined in accordance with the terms of the Unit A Warrants.
Cashless
Exercise. In the event that a registration statement covering shares of common stock underlying the Unit A Warrants, is not available
for the issuance of such shares of common stock underlying the Unit A Warrants, the holder may, in its sole discretion, exercise the
warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be made to us upon such exercise in payment
of the aggregate exercise price, elect instead to receive upon such exercise the net number of shares of common stock determined according
to the formula set forth in the warrant. In no event shall we be required to make any cash payments or net cash settlement to the registered
holder in lieu of issuance of common stock underlying the Unit A Warrants.
Certain
Adjustments. The exercise price and the number of shares of common stock purchasable upon the exercise of the Unit A Warrants are
subject to adjustment upon the occurrence of specific events, including stock dividends, stock splits, combinations and reclassifications
of our common stock.
Transferability.
Subject to applicable laws, the Unit A Warrants may be transferred at the option of the holders upon surrender of the Unit A Warrants
to our Transfer Agent together with the appropriate instruments of transfer.
Warrant
Agent and Exchange Listing. The Unit A Warrants will be issued in registered form under a warrant agency agreement between Vstock
Transfer LLC, as warrant agent, and us.
Fundamental
Transactions. If, at any time while the Unit A Warrants are outstanding, (1) we consolidate or merge with or into another corporation
and we are not the surviving corporation, (2) we sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially
all of our assets, (3) any purchase offer, tender offer or exchange offer (whether by us or another individual or entity) is completed
pursuant to which holders of our shares of common stock are permitted to sell, tender or exchange their shares of common stock for other
securities, cash or property and has been accepted by the holders of 50% or more of our outstanding shares of common stock, (4) we effect
any reclassification or recapitalization of our shares of common stock or any compulsory share exchange pursuant to which our shares
of common stock are converted into or exchanged for other securities, cash or property, or (5) we consummate a stock or share purchase
agreement or other business combination with another person or entity whereby such other person or entity acquires more than 50% of our
outstanding shares of common stock, each a “Fundamental Transaction,” then upon any subsequent exercise of the Unit A Warrants,
the holder thereof will have the right to receive the same amount and kind of securities, cash or property as it would have been entitled
to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the
holder of the number of warrant shares then issuable upon exercise of the warrant, and any additional consideration payable as part of
the Fundamental Transaction.
Rights
as a Stockholder. Except as otherwise provided in the Unit A Warrants or by virtue of such holder’s ownership of shares of
our common stock, the holder of a warrant does not have the rights or privileges of a holder of our common stock, including any voting
rights, until the holder exercises the warrant.
Beneficial
Ownership Limitation. Holder’s exercise shall be limited 4.99% of the Company’s outstanding common stock (or, upon election
by a Holder prior to the issuance of any Unit A Warrants, 9.99%) of the number of shares of the common stock outstanding immediately
after giving effect to the issuance of shares of common stock issuable upon exercise. The Holder, upon notice to the Company, may increase
or decrease the beneficial ownership limitation provided that the beneficial ownership limitation in no event exceeds 9.99% of the number
of shares of the common stock outstanding immediately after giving effect to the issuance of shares of common stock upon exercise of
the warrant held by the Holder. Any increase in the beneficial ownership limitation will not be effective until the 61st day
after such notice is delivered to the Company.
Governing
Law. The Unit A Warrants and the warrant agency agreement are governed by New York law.
Unit
B Warrants
Exercisability.
The Unit B Warrants are exercisable immediately upon issuance and at any time up to the date that is one year from the date of issuance.
The Unit B Warrants will be exercisable, at the option of each holder, in whole or in part, by delivering to us a duly executed exercise
notice accompanied by payment in full for the number of shares of our common stock purchased upon such exercise. Unless otherwise specified
in the Unit B Warrant, the holder will not have the right to exercise any portion of the Unit B Warrant if the holder (together with
its affiliates) would beneficially own in excess of 4.99% of the number of shares of our common stock outstanding immediately after giving
effect to the exercise (or, upon election by a Holder prior to the issuance of any Unit B Warrants, 9.99%), as such percentage ownership
is determined in accordance with the terms of the Unit B Warrants.
Certain
Adjustments. The exercise price and the number of shares of common stock purchasable upon the exercise of the Unit B Warrants are
subject to adjustment upon the occurrence of specific events, including stock dividends, stock splits, combinations and reclassifications
of our common stock.
Transferability.
Subject to applicable laws, the Unit B Warrants may be transferred at the option of the holders upon surrender of the Unit B Warrants
to our Transfer Agent together with the appropriate instruments of transfer.
Fundamental
Transactions. If, at any time while the Unit B Warrants are outstanding, (1) we consolidate or merge with or into another corporation
and we are not the surviving corporation, (2) we sell, lease, license, assign, transfer, convey or otherwise dispose of all or substantially
all of our assets, (3) any purchase offer, tender offer or exchange offer (whether by us or another individual or entity) is completed
pursuant to which holders of our shares of common stock are permitted to sell, tender or exchange their shares of common stock for other
securities, cash or property and has been accepted by the holders of 50% or more of our outstanding shares of common stock, (4) we effect
any reclassification or recapitalization of our shares of common stock or any compulsory share exchange pursuant to which our shares
of common stock are converted into or exchanged for other securities, cash or property, or (5) we consummate a stock or share purchase
agreement or other business combination with another person or entity whereby such other person or entity acquires more than 50% of our
outstanding shares of common stock, each a “Fundamental Transaction,” then upon any subsequent exercise of the Unit B Warrants,
the holder thereof will have the right to receive the same amount and kind of securities, cash or property as it would have been entitled
to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the
holder of the number of warrant shares then issuable upon exercise of the Unit B Warrant, and any additional consideration payable as
part of the Fundamental Transaction.
Rights
as a Stockholder. Except as otherwise provided in the Unit B Warrants or by virtue of such holder’s ownership of shares of
our common stock, the holder of a Unit B Warrant does not have the rights or privileges of a holder of our common stock, including any
voting rights, until the holder exercises the Unit B Warrant.
Beneficial
Ownership Limitation. Holder’s exercise shall be limited 4.99% of the Company’s outstanding common stock (or, upon election
by a Holder prior to the issuance of any Unit B Warrants, 9.99%) of the number of shares of the common stock outstanding immediately
after giving effect to the issuance of shares of common stock issuable upon exercise. The Holder, upon notice to the Company, may increase
or decrease the beneficial ownership limitation provided that the beneficial ownership limitation in no event exceeds 9.99% of the number
of shares of the common stock outstanding immediately after giving effect to the issuance of shares of common stock upon exercise of
the Unit B Warrant held by the Holder. Any increase in the beneficial ownership limitation will not be effective until the 61st
day after such notice is delivered to the Company.
Governing
Law. The Unit B Warrants are governed by New York law.
Unit
1 and Unit 2 Warrants
Upon
consummation of the April 2020 Offering, all the Bridge Notes were mandatorily converted (the “Bridge Note Conversion”).
Pursuant to the terms of the Bridge Purchase Agreements, the Investors received shares of the Company’s common stock at discount
to the April 2020 Offering as well as two warrants (the “Unit 1 Warrants” and “Unit 2 Warrants”) to purchase
shares of Common Stock of the Company, with each to purchase one share of Common Stock with an exercise price per share of $4.25
The
Unit 1 Warrants are substantially the same as the Unit A Warrants, except that (i) the Unit 1 Warrants are not traded on the Nasdaq;
(ii) the Unit 1 Warrants do not contain a cashless exercise provision; and (iii) there is no warrant agent associated with the Unit 1
Warrants.
The
Unit 2 Warrants are substantially the same as the Unit B Warrants, except that there is no warrant agent associated with Unit 2 Warrants.
Authorized
but Unissued Shares
Our
authorized but unissued shares of common stock and preferred stock will be available for future issuance without shareholder approval,
except as may be required under the listing rules of any stock exchange on which our common stock is then listed. We may use additional
shares for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and
employee benefit plans. The existence of authorized but unissued shares of common stock and preferred stock could render more difficult
or discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
Limitation
on Directors’ Liability
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.
Nevada
Anti-Takeover Statute
We
may be subject to Nevada’s Combination with Interested Stockholders Statute (Nevada Corporation Law Sections 78.411-78.444) which
prohibits an “interested stockholder” from entering into a “combination” with the corporation, unless certain
conditions are met. An “interested stockholder” is a person who, together with affiliates and associates, beneficially owns
(or within the prior two years, did beneficially own) 10% or more of the corporation’s capital stock entitled to vote.
The
NASDAQ Capital Market Listing
Our
common stock and Unit A Warrants are quoted for trading on The NASDAQ Capital Market under the symbols “GMBL” and “GMBLW”,
respectively.
Transfer
Agent
The
transfer agent and registrar for our common stock is VStock Transfer, LLC with an address at 18 Lafayette Pl, Woodmere, NY 11598.
DESCRIPTION
OF DEBT SECURITIES
General
The
debt securities that we may offer by this prospectus consist of notes, debentures, or other evidences of indebtedness. The debt securities
may constitute either senior or subordinated debt securities, and in either case may be either secured or unsecured. Any debt securities
that we offer and sell will be our direct obligations. Debt securities may be issued in one or more series. All debt securities of any
one series need not be issued at the same time, and unless otherwise provided, a series of debt securities may be reopened, with the
required consent of the holders of outstanding debt securities, for issuance of additional debt securities of that series or to establish
additional terms of that series of debt securities (with such additional terms applicable only to unissued or additional debt securities
of that series). The form of indenture has been filed as an exhibit to the registration statement of which this prospectus is a part
and is subject to any amendments or supplements that we may enter into with the trustee(s), however, we may issue debt securities not
subject to the indenture provided such terms of debt securities are not otherwise required to be set forth in the indenture. The material
terms of the indenture are summarized below and we refer you to the indenture for a detailed description of these material terms. Additional
or different provisions that are applicable to a particular series of debt securities will, if material, be described in a prospectus
supplement relating to the offering of debt securities of that series. These provisions may include, among other things and to the extent
applicable, the following:
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the
title of the debt securities, including, as applicable, whether the debt securities will be issued as senior debt securities, senior
subordinated debt securities or subordinated debt securities, any subordination provisions particular to the series of debt securities;
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any
limit on the aggregate principal amount of the debt securities;
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whether
the debt securities are senior debt securities or subordinated debt securities and applicable subordination provisions, if any;
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whether
the debt securities will be secured or unsecured;
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if
other than 100% of the aggregate principal amount, the percentage of the aggregate principal amount at which we will sell the debt
securities, such as an original issuance discount;
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the
date or dates, whether fixed or extendable, on which the principal of the debt securities will be payable;
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the
rate or rates, which may be fixed or variable, at which the debt securities will bear interest, if any, the date or dates from which
any such interest will accrue, the interest payment dates on which we will pay any such interest, the basis upon which interest will
be calculated if other than that of a 360-day year consisting of twelve 30-day months, and, in the case of registered securities,
the record dates for the determination of holders to whom interest is payable;
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the
place or places where the principal of and any premium or interest on the debt securities will be payable and where the debt securities
may be surrendered for conversion or exchange;
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whether
we may, at our option, redeem the debt securities, and if so, the price or prices at which, the period or periods within which, and
the terms and conditions upon which, we may redeem the debt securities, in whole or in part, pursuant to any sinking fund or otherwise;
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if
other than 100% of the aggregate principal amount thereof, the portion of the principal amount of the debt securities which will
be payable upon declaration of acceleration of the maturity date thereof or provable in bankruptcy, or, if applicable, which is convertible
or exchangeable;
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any
obligation we may have to redeem, purchase or repay the debt securities pursuant to any sinking fund or analogous provisions or at
the option of a holder of debt securities, and the price or prices at which, the currency in which and the period or periods within
which, and the terms and conditions upon which, the debt securities will be redeemed, purchased or repaid, in whole or in part, pursuant
to any such obligation, and any provision for the remarketing of the debt securities;
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the
issuance of debt securities as registered securities or unregistered securities or both, and the rights of the holders of the debt
securities to exchange unregistered securities for registered securities, or vice versa, and the circumstances under which any such
exchanges, if permitted, may be made;
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the
denominations, which may be in United States Dollars or in any foreign currency, in which the debt securities will be issued, if
other than denominations of $1,000 and any integral multiple thereof;
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whether
the debt securities will be issued in the form of certificated debt securities, and if so, the form of the debt securities (or forms
thereof if unregistered and registered securities are issuable in that series), including the legends required by law or as we deem
necessary or appropriate, the form of any coupons or temporary global security which may be issued and the forms of any other certificates
which may be required under the indenture or which we may require in connection with the offering, sale, delivery or exchange of
the debt securities;
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if
other than United States Dollars, the currency or currencies in which payments of principal, interest and other amounts payable with
respect to the debt securities will be denominated, payable, redeemable or subject to repurchase, as the case may be;
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whether
the debt securities may be issuable in tranches;
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the
obligations, if any, we may have to permit the conversion or exchange of the debt securities into common stock, preferred stock or
other capital stock or property, or a combination thereof, and the terms and conditions upon which such conversion or exchange will
be effected (including conversion price or exchange ratio), and any limitations on the ownership or transferability of the securities
or property into which the debt securities may be converted or exchanged;
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if
other than the trustee under the indenture, any trustees, authenticating or paying agents, transfer agents or registrars or any other
agents with respect to the debt securities;
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any
deletions from, modifications of or additions to the events of default with respect to the debt securities or the right of the Trustee
or the holders of the debt securities in connection with events of default;
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any
deletions from, modifications of or additions to the covenants with respect to the debt securities;
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if
the amount of payments of principal of, and make-whole amount, if any, and interest on the debt securities may be determined with
reference to an index, the manner in which such amount will be determined;
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whether
the debt securities will be issued in whole or in part in the global form of one or more debt securities and, if so, the depositary
for such debt securities, the circumstances under which any such debt security may be exchanged for debt securities registered in
the name of, and under which any transfer of debt securities may be registered in the name of, any person other than such depositary
or its nominee, and any other provisions regarding such debt securities;
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whether,
under what circumstances and the currency in which, we will pay additional amounts on the debt securities to any holder of the debt
securities who is not a United States person in respect of any tax, assessment or governmental charge and, if so, whether we will
have the option to redeem such debt securities rather than pay such additional amounts, and the terms of any such option;
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whether
the debt securities will be secured by any collateral and, if so, a general description of the collateral and the terms of any related
security, pledge or other agreements;
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the
persons to whom any interest on the debt securities will be payable, if other than the registered holders thereof on the regular
record date therefor; and
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any
other material terms or conditions upon which the debt securities will be issued.
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Unless
otherwise indicated in the applicable prospectus supplement, we will issue debt securities in fully registered form without coupons and
in denominations of $1,000 and in integral multiples of $1,000, and interest will be computed on the basis of a 360-day year of twelve
30-day months. If any interest payment date or the maturity date falls on a day that is not a business day, then the payment will be
made on the next business day without additional interest and with the same effect as if it were made on the originally scheduled date.
“Business day” means any calendar day that is not a Saturday, Sunday or legal holiday in New York, New York, and on which
the trustee and commercial banks are open for business in New York, New York.
Unless
we inform you otherwise in a prospectus supplement, each series of our senior debt securities will rank equally in right of payment with
all of our other unsubordinated debt. The subordinated debt securities will rank junior in right of payment and be subordinate to all
of our unsubordinated debt.
Unless
otherwise indicated in the applicable prospectus supplement, the trustee will act as paying agent and registrar for the debt securities
under the indenture. We may act as paying agent under the indenture.
The
prospectus supplement will contain a description of United States federal income tax consequences relating to the debt securities, to
the extent applicable.
Covenants
The
applicable prospectus supplement will describe any covenants, such as restrictive covenants restricting us or our subsidiaries, if any,
from incurring, issuing, assuming or guarantying any indebtedness or restricting us or our subsidiaries, if any, from paying dividends
or acquiring any of our or its capital stock.
Consolidation,
Merger and Transfer of Assets
The
indenture permits a consolidation or merger between us and another entity and/or the sale, conveyance or lease by us of all or substantially
all of our property and assets, provided that:
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the
resulting or acquiring entity, if other than us, is organized and existing under the laws of a United States jurisdiction and assumes
all of our responsibilities and liabilities under the indenture, including the payment of all amounts due on the debt securities
and performance of the covenants in the indenture;
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immediately
after the transaction, and giving effect to the transaction, no event of default under the indenture exists; and
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we
have delivered to the trustee an officers’ certificate stating that the transaction and, if a supplemental indenture is required
in connection with the transaction, the supplemental indenture comply with the indenture and that all conditions precedent to the
transaction contained in the indenture have been satisfied.
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If
we consolidate or merge with or into any other entity, or sell or lease all or substantially all of our assets in compliance with the
terms and conditions of the indenture, the resulting or acquiring entity will be substituted for us in the indenture and the debt securities
with the same effect as if it had been an original party to the indenture and the debt securities. As a result, such successor entity
may exercise our rights and powers under the indenture and the debt securities, in our name and, except in the case of a lease, we will
be released from all our liabilities and obligations under the indenture and under the debt securities.
Notwithstanding
the foregoing, we may transfer all of our property and assets to another entity if, immediately after giving effect to the transfer,
such entity is our wholly owned subsidiary. The term “wholly owned subsidiary” means any subsidiary in which we and/or our
other wholly owned subsidiaries, if any, own all of the outstanding capital stock.
Modification
and Waiver
Under
the indenture, some of our rights and obligations and some of the rights of the holders of the debt securities may be modified or amended
with the consent of the holders of not less than a majority in aggregate principal amount of the outstanding debt securities affected
by the modification or amendment. However, the following modifications and amendments will not be effective against any holder without
its consent:
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a
change in the stated maturity date of any payment of principal or interest;
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a
reduction in the principal amount of or interest on any debt securities;
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an
alteration or impairment of any right to convert at the rate or upon the terms provided in the indenture;
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a
change in the currency in which any payment on the debt securities is payable;
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an
impairment of a holder’s right to sue us for the enforcement of payments due on the debt securities; or
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a
reduction in the percentage of outstanding debt securities required to consent to a modification or amendment of the indenture or
required to consent to a waiver of compliance with certain provisions of the indenture or certain defaults under the indenture.
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Under
the indenture, the holders of not less than a majority in aggregate principal amount of the outstanding debt securities may, on behalf
of all holders of the debt securities:
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waive
compliance by us with certain restrictive provisions of the indenture; and
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waive
any past default under the indenture in accordance with the applicable provisions of the indenture, except a default in the payment
of the principal of or interest on any series of debt securities.
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Events
of Default
Unless
we indicate otherwise in the applicable prospectus supplement, “event of default” under the indenture will mean, with respect
to any series of debt securities, any of the following:
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failure
to pay interest on any debt security for 30 days after the payment is due;
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failure
to pay the principal of any debt security when due, either at maturity, upon redemption, by declaration or otherwise;
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failure
on our part to observe or perform any other covenant or agreement in the indenture that applies to the debt securities for 90 days
after we have received written notice of the failure to perform in the manner specified in the indenture; and
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certain
events of bankruptcy, insolvency or reorganization.
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Remedies
Upon an Event of Default
If
an event of default occurs and continues, the trustee or the holders of not less than 25% in aggregate principal amount of the outstanding
debt securities of such series may declare the entire principal of all the debt securities to be due and payable immediately, except
that, if the event of default is caused by certain events in bankruptcy, insolvency or reorganization, the entire principal of all of
the debt securities of such series will become due and payable immediately without any act on the part of the trustee or holders of the
debt securities. If such a declaration occurs, the holders of a majority of the aggregate principal amount of the outstanding debt securities
of such series can, subject to conditions, rescind the declaration.
The
indenture requires us to furnish to the trustee not less often than annually, a certificate from our principal executive officer, principal
financial officer or principal accounting officer, as the case may be, as to such officer’s knowledge of our compliance with all
conditions and covenants under the indenture. The trustee may withhold notice to the holders of debt securities of any default, except
defaults in the payment of principal of or interest on any debt securities if the trustee in good faith determines that the withholding
of notice is in the best interests of the holders. For purposes of this paragraph, “default” means any event which is, or
after notice or lapse of time or both would become, an event of default under the indenture.
The
trustee is not obligated to exercise any of its rights or powers under the indenture at the request, order or direction of any holders
of debt securities, unless the holders offer the trustee satisfactory security or indemnity. If satisfactory security or indemnity is
provided, then, subject to other rights of the trustee, the holders of a majority in aggregate principal amount of the outstanding debt
securities may direct the time, method and place of:
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conducting
any proceeding for any remedy available to the trustee; or
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exercising
any trust or power conferred upon the trustee.
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The
holder of a debt security will have the right to begin any proceeding with respect to the indenture or for any remedy only if:
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the
holder has previously given the trustee written notice of a continuing event of default;
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the
holders of not less than a majority in aggregate principal amount of the outstanding debt securities have made a written request
of, and offered reasonable indemnity to, the trustee to begin such proceeding;
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the
trustee has not started such proceeding within 60 days after receiving the request; and
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no
direction inconsistent with such written request has been given to the trustee under the indenture.
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However,
the holder of any debt security will have an absolute right to receive payment of principal of and interest on the debt security when
due and to institute suit to enforce this payment.
Satisfaction
and Discharge; Defeasance
Satisfaction
and Discharge of Indenture. Unless otherwise indicated in the applicable prospectus supplement, if at any time,
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we
have paid the principal of and interest on all the debt securities of any series, except for debt securities which have been destroyed,
lost or stolen and which have been replaced or paid in accordance with the indenture, as and when the same shall have become due
and payable, or
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we
have delivered to the trustee for cancellation all debt securities of any series theretofore authenticated, except for debt securities
of such series which have been destroyed, lost or stolen and which have been replaced or paid as provided in the indenture, or
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all
the debt securities of such series not theretofore delivered to the trustee for cancellation have become due and payable, or are
by their terms are to become due and payable within one year or are to be called for redemption within one year, and we have deposited
with the trustee, in trust, sufficient money or government obligations, or a combination thereof, to pay the principal, any interest
and any other sums due on the debt securities, on the dates the payments are due or become due under the indenture and the terms
of the debt securities,
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then
the indenture shall cease to be of further effect with respect to the debt securities of such series, except for:
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rights
of registration of transfer and exchange, and our right of optional redemption;
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substitution
of mutilated, defaced, destroyed, lost or stolen debt securities;
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rights
of holders to receive payments of principal thereof and interest thereon upon the original stated due dates therefor (but not upon
acceleration) and remaining rights of the holders to receive mandatory sinking fund payments, if any;
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the
rights, obligations and immunities of the trustee under the indenture; and
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the
rights of the holders of such series of debt securities as beneficiaries thereof with respect to the property so deposited with the
trustee payable to all or any of them.
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Defeasance
and Covenant Defeasance. Unless otherwise indicated in the applicable prospectus supplement, we may elect with respect to any debt
securities of any series either:
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to
defease and be discharged from all of our obligations with respect to such debt securities (“defeasance”), with certain
exceptions described below; or
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to
be released from our obligations with respect to such debt securities under such covenants as may be specified in the applicable
prospectus supplement, and any omission to comply with those obligations will not constitute a default or an event of default with
respect to such debt securities (“covenant defeasance”).
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We
must comply with the following conditions before the defeasance or covenant defeasance can be effected:
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we
must irrevocably deposit with the indenture trustee or other qualifying trustee, under the terms of an irrevocable trust agreement
in form and substance satisfactory to the trustee, trust funds in trust solely for the benefit of the holders of such debt securities,
sufficient money or government obligations, or a combination thereof, to pay the principal, any interest and any other sums on the
due dates for those payments; and
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we
must deliver to the trustee an opinion of counsel to the effect that the holders of such debt securities will not recognize income,
gain or loss for federal income tax purposes as a result of defeasance or covenant defeasance, as the case may be, to be effected
with respect to such debt securities and will be subject to federal income tax on the same amount, in the same manner and at the
same times as would be the case if such defeasance or covenant defeasance, as the case may be, had not occurred.
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In
connection with defeasance, any irrevocable trust agreement contemplated by the indenture must include, among other things, provision
for:
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payment
of the principal of and interest on such debt securities, if any, appertaining thereto when due (by redemption, sinking fund payments
or otherwise),
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the
payment of the expenses of the trustee incurred or to be incurred in connection with carrying out such trust provisions,
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rights
of registration, transfer, substitution and exchange of such debt securities in accordance with the terms stated in the indenture,
and
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continuation
of the rights, obligations and immunities of the trustee as against the holders of such debt securities as stated in the indenture.
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The
accompanying prospectus supplement may further describe any provisions permitting or restricting defeasance or covenant defeasance with
respect to the debt securities of a particular series.
Global
Securities
Unless
otherwise indicated in the applicable prospectus supplement, each debt security offered by this prospectus will be issued in the form
of one or more global debt securities representing all or part of that series of debt securities. This means that we will not issue certificates
for that series of debt securities to the holders. Instead, a global debt security representing that series will be deposited with, or
on behalf of, a securities depositary and registered in the name of the depositary or a nominee of the depositary. Any such depositary
must be a clearing agency registered under the Exchange Act. We will describe the specific terms of the depositary arrangement with respect
to a series of debt securities to be represented by a global security in the applicable prospectus supplement.
Notices
We
will give notices to holders of the debt securities by mail at the addresses listed in the security register. In the case of notice in
respect of unregistered securities or coupon securities, we may give notice by publication in a newspaper of general circulation in New
York, New York.
Governing
Law
The
particular terms of a series of debt securities will be described in a prospectus supplement relating to such series of debt securities.
Any indentures will be subject to and governed by the Trust Indenture Act of 1939, as amended, and may be supplemented or amended from
time to time following their execution. Unless otherwise stated in the applicable prospectus supplement, we will not be limited in the
amount of debt securities that we may issue, and neither the senior debt securities nor the subordinated debt securities will be secured
by any of our property or assets. Thus, by owning debt securities, you are one of our unsecured creditors.
Regarding
the Trustee
From
time to time, we may maintain deposit accounts and conduct other banking transactions with the trustee to be appointed under the indenture
or its affiliates in the ordinary course of business.
DESCRIPTION
OF WARRANTS
We
may offer to sell warrants from time to time. If we do so, we will describe the specific terms of the warrants in a prospectus supplement.
In particular, we may issue warrants for the purchase of common stock, preferred stock and/or debt securities in one or more series.
We may also issue warrants independently or together with other securities and the warrants may be attached to or separate from those
securities.
We
will evidence each series of warrants by warrant certificates that we will issue under a separate agreement. We will enter into the warrant
agreement with a warrant agent. We will indicate the name and address of the warrant agent in the applicable prospectus supplement relating
to a particular series of warrants.
We
will describe in the applicable prospectus supplement the terms of the series of warrants, including:
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the
offering price and aggregate number of warrants offered;
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the
currency for which the warrants may be purchased;
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if
applicable, the designation and terms of the securities with which the warrants are issued and the number of warrants issued with
each such security or each principal amount of such security;
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if
applicable, the date on and after which the warrants and the related securities will be separately transferable;
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in
the case of warrants to purchase debt securities, the principal amount of debt securities purchasable upon exercise of one warrant
and the price at, and currency in which, this principal amount of debt securities may be purchased upon such exercise;
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in
the case of warrants to purchase common stock or preferred stock, the number of shares of common stock or preferred stock, as the
case may be, purchasable upon the exercise of one warrant and the price at which these shares may be purchased upon such exercise;
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the
effect of any merger, consolidation, sale or other disposition of our business on the warrant agreement and the warrants;
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the
terms of any rights to redeem or call the warrants;
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any
provisions for changes to or adjustments in the exercise price or number of securities issuable upon exercise of the warrants;
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the
dates on which the right to exercise the warrants will commence and expire;
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the
manner in which the warrant agreement and warrants may be modified;
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certain
United States federal income tax consequences of holding or exercising the warrants;
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the
terms of the securities issuable upon exercise of the warrants; and
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any
other specific material terms, preferences, rights or limitations of or restrictions on the warrants.
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Holders
may exercise the warrants by delivering the warrant certificate representing the warrants to be exercised together with other requested
information, and paying the required amount to the warrant agent in immediately available funds, as provided in the applicable prospectus
supplement. We will set forth in the applicable prospectus supplement the information that the holder of the warrant will be required
to deliver to the warrant agent.
Upon
receipt of the required payment and the warrant certificate properly completed and duly executed at the office of the warrant agent or
any other office indicated in the applicable prospectus supplement, we will issue and deliver the securities purchasable upon such exercise.
If a holder exercises fewer than all of the warrants represented by the warrant certificate, then we will issue a new warrant certificate
for the remaining amount of warrants.
Holder
will not have any of the rights of the holders of the securities purchasable upon the exercise of warrants until you exercise them. Accordingly,
holder will not be entitled to, among other things, vote or receive dividend payments or similar distributions on the securities you
can purchase upon exercise of the warrants.
The
information provided above is only a summary of the terms under which we may offer warrants for sale. Accordingly, investors must carefully
review the applicable warrant agreement for more information about the specific terms and conditions of these warrants before investing
in us. In addition, please carefully review the information provided in the applicable prospectus supplement, which contains additional
information that is important for you to consider in evaluating an investment in our securities.
DESCRIPTION
OF RIGHTS
We
may issue rights to our stockholders to purchase shares of our common stock or preferred stock described in this prospectus. We may offer
rights separately or together with one or more additional rights, preferred stock, common stock, warrants or any combination of those
securities in the form of units, as described in the applicable prospectus supplement. Each series of rights will be issued under a separate
rights agreement to be entered into between us and a bank or trust company, as rights agent. The rights agent for any rights we offer
will be set forth in the applicable prospectus supplement. The rights agent will act solely as our agent in connection with the certificates
relating to the rights of the series of certificates and will not assume any obligation or relationship of agency or trust for or with
any holders of rights certificates or beneficial owners of rights. The following description sets forth certain general terms and provisions
of the rights to which any prospectus supplement may relate. The particular terms of the rights to which any prospectus supplement may
relate and the extent, if any, to which the general provisions may apply to the rights so offered will be described in the applicable
prospectus supplement. To the extent that any particular terms of the rights, rights agreement or rights certificates described in a
prospectus supplement differ from any of the terms described below, then the terms described below will be deemed to have been superseded
by that prospectus supplement. We encourage you to read the applicable rights agreement and rights certificate for additional information
before you decide whether to purchase any of our rights.
The
prospectus supplement relating to any rights that we offer will include specific terms relating to the offering, including, among other
matters:
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the
date of determining the stockholders entitled to the rights distribution;
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the
aggregate number of shares of common stock, preferred stock or other securities purchasable upon exercise of the rights;
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the
exercise price;
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the
aggregate number of rights issued;
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whether
the rights are transferrable and the date, if any, on and after which the rights may be separately transferred;
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the
date on which the right to exercise the rights will commence, and the date on which the right to exercise the rights will expire;
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the
method by which holders of rights will be entitled to exercise;
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the
conditions to the completion of the offering;
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the
withdrawal, termination and cancellation rights;
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whether
there are any backstop or standby purchaser or purchasers and the terms of their commitment;
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whether
stockholders are entitled to oversubscription right;
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any
U.S. federal income tax considerations; and
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any
other terms of the rights, including terms, procedures and limitations relating to the distribution, exchange and exercise of the
rights.
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If
less than all of the rights issued in any rights offering are exercised, we may offer any unsubscribed securities directly to persons
other than stockholders, to or through agents, underwriters or dealers or through a combination of such methods, including pursuant to
standby arrangements, as described in the applicable prospectus supplement. In connection with any rights offering, we may enter into
a standby underwriting or other arrangement with one or more underwriters or other persons pursuant to which such underwriters or other
persons would purchase any offered securities remaining unsubscribed for after such rights offering.
DESCRIPTION
OF UNITS
We
may issue units consisting of any combination of the other types of securities offered under this prospectus in one or more series. We
may evidence each series of units by unit certificates that we will issue under a separate agreement. We may enter into unit agreements
with a unit agent. We will indicate the name and address of the unit agent in the applicable prospectus supplement relating to a particular
series of units.
The
following description, together with the additional information included in any applicable prospectus supplement, summarizes the general
features of the units that we may offer under this prospectus. You should read any prospectus supplement and any free writing prospectus
that we may authorize to be provided to you related to the series of units being offered, as well as the complete unit agreements that
contain the terms of the units. Specific unit agreements will contain additional important terms and provisions and we will file as an
exhibit to the registration statement of which this prospectus is a part, or will incorporate by reference from another report that we
file with the SEC, the form of each unit agreement relating to units offered under this prospectus.
If
we offer any units, certain terms of that series of units will be described in the applicable prospectus supplement, including, without
limitation, the following, as applicable:
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the
title of the series of units;
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identification
and description of the separate constituent securities comprising the units;
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the
price or prices at which the units will be issued;
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the
date, if any, on and after which the constituent securities comprising the units will be separately transferable;
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a
discussion of certain United States federal income tax considerations applicable to the units; and
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any
other terms of the units and their constituent securities.
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PLAN
OF DISTRIBUTION
We
may sell the securities from time to time pursuant to underwritten public offerings, negotiated transactions, block trades or a combination
of these methods or through underwriters or dealers, through agents and/or directly to one or more purchasers. The securities may be
distributed from time to time in one or more transactions:
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at
a fixed price or prices, which may be changed;
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at
market prices prevailing at the time of sale;
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at
prices related to such prevailing market prices; or
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at
negotiated prices.
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Each
time that we sell securities covered by this prospectus, we will provide a prospectus supplement or supplements that will describe the
method of distribution and set forth the terms and conditions of the offering of such securities, including the offering price of the
securities and the proceeds to us, if applicable.
Offers
to purchase the securities being offered by this prospectus may be solicited directly. Agents may also be designated to solicit offers
to purchase the securities from time to time. Any agent involved in the offer or sale of our securities will be identified in a prospectus
supplement.
If
a dealer is utilized in the sale of the securities being offered by this prospectus, the securities will be sold to the dealer, as principal.
The dealer may then resell the securities to the public at varying prices to be determined by the dealer at the time of resale.
If
an underwriter is utilized in the sale of the securities being offered by this prospectus, an underwriting agreement will be executed
with the underwriter at the time of sale and the name of any underwriter will be provided in the prospectus supplement that the underwriter
will use to make resales of the securities to the public. In connection with the sale of the securities, we or the purchasers of securities
for whom the underwriter may act as agent, may compensate the underwriter in the form of underwriting discounts or commissions. The underwriter
may sell the securities to or through dealers, and those dealers may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for which they may act as agent. Unless otherwise indicated in a prospectus
supplement, an agent will be acting on a best efforts basis and a dealer will purchase securities as a principal, and may then resell
the securities at varying prices to be determined by the dealer.
Any
compensation paid to underwriters, dealers or agents in connection with the offering of the securities, and any discounts, concessions
or commissions allowed by underwriters to participating dealers will be provided in the applicable prospectus supplement. Underwriters,
dealers and agents participating in the distribution of the securities may be deemed to be underwriters within the meaning of the Securities
Act of 1933, as amended, and any discounts and commissions received by them and any profit realized by them on resale of the securities
may be deemed to be underwriting discounts and commissions. We may enter into agreements to indemnify underwriters, dealers and agents
against civil liabilities, including liabilities under the Securities Act, or to contribute to payments they may be required to make
in respect thereof and to reimburse those persons for certain expenses.
Any
common stock will be listed on the Nasdaq Capital Market, but any other securities may or may not be listed on a national securities
exchange. To facilitate the offering of securities, certain persons participating in the offering may engage in transactions that stabilize,
maintain or otherwise affect the price of the securities. This may include over-allotments or short sales of the securities, which involve
the sale by persons participating in the offering of more securities than were sold to them. In these circumstances, these persons would
cover such over-allotments or short positions by making purchases in the open market or by exercising their over-allotment option, if
any. In addition, these persons may stabilize or maintain the price of the securities by bidding for or purchasing securities in the
open market or by imposing penalty bids, whereby selling concessions allowed to dealers participating in the offering may be reclaimed
if securities sold by them are repurchased in connection with stabilization transactions. The effect of these transactions may be to
stabilize or maintain the market price of the securities at a level above that which might otherwise prevail in the open market. These
transactions may be discontinued at any time.
We
may engage in at the market offerings into an existing trading market in accordance with Rule 415(a)(4) under the Securities Act.
In
addition, we may enter into derivative transactions with third parties, or sell securities not covered by this prospectus to third parties
in privately negotiated transactions. If the applicable prospectus supplement so indicates, in connection with those derivatives, the
third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions.
If so, the third party may use securities pledged by us or borrowed from us or others to settle those sales or to close out any related
open borrowings of stock, and may use securities received from us in settlement of those derivatives to close out any related open borrowings
of stock. The third party in such sale transactions will be an underwriter and, if not identified in this prospectus, will be named in
the applicable prospectus supplement (or a post-effective amendment). In addition, we may otherwise loan or pledge securities to a financial
institution or other third party that in turn may sell the securities short using this prospectus and an applicable prospectus supplement.
Such financial institution or other third party may transfer its economic short position to investors in our securities or in connection
with a concurrent offering of other securities.
We
do not make any representation or prediction as to the direction or magnitude of any effect that the transactions described above might
have on the price of the securities. In addition, we do not make any representation that underwriters will engage in such transactions
or that such transactions, once commenced, will not be discontinued without notice.
The
specific terms of any lock-up provisions in respect of any given offering will be described in the applicable prospectus supplement.
To
comply with applicable state securities laws, the securities offered by this prospectus will be sold, if necessary, in such jurisdictions
only through registered or licensed brokers or dealers. In addition, securities may not be sold in some states unless they have been
registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available
and is complied with.
The
underwriters, dealers and agents may engage in transactions with us, or perform services for us, in the ordinary course of business for
which they receive compensation.
LEGAL
MATTERS
Lucosky
Brookman LLP will pass upon certain legal matters relating to the issuance and sale of the securities offered hereby on behalf of Esports
Entertainment Group, Inc. Additional legal matters may be passed upon for us or any underwriters, dealers or agents, by counsel that
we will name in the applicable prospectus supplement.
EXPERTS
Our
consolidated balance sheets as of June 30, 2020 and 2019, and the related consolidated statements of operations, stockholders’
equity (deficit), and cash flows for each of those two years have been audited by Rosenberg Rich Baker Berman, P.A., an independent registered
public accounting firm, as set forth in its report incorporated by reference and are included in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
Up
to $20,000,000
of
Common Stock
ESPORTS
ENTERTAINMENT GROUP, INC.
PROSPECTUS
SUPPLEMENT
MAXIM
GROUP LLC
September 3, 2021
Esports Entertainment (NASDAQ:GMBL)
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