Golden Matrix (GMGI) - 2025 Q3 - Quarterly Report

FORM 10-Q Filing Information This section provides the Form 10-Q filing details for Golden Matrix Group, Inc., including its Q2 2025 period, non-accelerated filer status, and outstanding common shares - The report is a Quarterly Report for the period ended June 30, 2025[2] - Golden Matrix Group, Inc. is classified as a non-accelerated filer and a smaller reporting company[4] Common Stock Information as of August 6, 2025 | Metric | Value (Shares) | | :--- | :--- | | Shares Issued and Outstanding | 139,483,065 | | Par Value Per Share | $0.00001 | Explanatory Note on MeridianBet Group Acquisition This section explains the April 9, 2024, acquisition of MeridianBet Group as a reverse merger, with MeridianBet as the accounting acquirer and a fiscal year-end change to December 31 - Golden Matrix Group, Inc. acquired 100% of MeridianBet Group on April 9, 2024, effective April 1, 2024[6] - The acquisition was accounted for as a reverse merger, with MeridianBet Group as the accounting acquirer[7] - The Company's fiscal year end changed from October 31 to December 31 to align with MeridianBet Group[9] Special Note Regarding Forward-Looking Statements This section warns that the report contains forward-looking statements subject to various risks, including financing, dilution, acquisitions, and regulatory changes, advising investors against undue reliance - The report contains forward-looking statements involving known and unknown risks, uncertainties, and other factors[13] - Need for significant additional financing for growth, acquisitions, and post-closing payments[15] - Dilution from conversion of preferred stock, warrants, and/or acquisitions[15] - Reliance on third-party gaming content suppliers and associated costs[15] - Ability to obtain and maintain gaming licenses[15] - Potential effect of economic downturns, inflation, and interest rate changes[15] - Risks associated with gaming fraud, user cheating, cyber-attacks, and systems failures[15] - Effect of current and future regulations and compliance challenges[22] - The Company has no obligation to update publicly any forward-looking statements, and investors are cautioned not to unduly rely on them[13][18] PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents the unaudited consolidated financial statements, including Balance Sheets, Statements of Operations, Shareholders' Equity, and Cash Flow, with explanatory notes Consolidated Balance Sheets The consolidated balance sheets show a slight decrease in total assets, a notable decrease in total liabilities, and a significant increase in shareholders' equity from December 2024 to June 2025 Consolidated Balance Sheet Highlights | Metric | June 30, 2025 (Unaudited, USD) | December 31, 2024 (Audited, USD) | | :--- | :--- | :--- | | Total Assets | $210,274,502 | $213,717,593 | | Total Liabilities | $85,291,979 | $104,767,013 | | Total Equity | $124,982,523 | $108,950,580 | - Cash and cash equivalents decreased from $30.13 million to $22.14 million[21][23] - Goodwill & intangible assets, net, increased from $127.64 million to $129.02 million[21][23] - Current portion of long-term loan decreased from $16.79 million to $11.18 million[21][23] - Non-current portion of long-term loan decreased from $14.36 million to $11.33 million[21][23] - Non-current portion of consideration payable – related parties decreased from $15.00 million to $0[21][23] Consolidated Statements of Operations and Comprehensive Income For the three and six months ended June 30, 2025, the Company reported a net loss, a significant shift from prior year net income, driven by increased operating and interest expenses despite revenue growth Consolidated Statements of Operations Highlights | Metric | Three Months Ended June 30, 2025 (USD) | Three Months Ended June 30, 2024 (USD) | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (USD) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $43,245,368 | $39,415,242 | $85,968,421 | $64,265,829 | | Gross profit | $24,377,019 | $21,685,542 | $48,572,980 | $39,377,472 | | Income (loss) from operations | $(2,304,850) | $125,112 | $(2,410,867) | $3,819,233 | | Net income (loss) attributable to GMGI | $(3,584,345) | $64,925 | $(3,815,953) | $4,055,659 | | Basic EPS | $(0.03) | $0.00 | $(0.03) | $0.04 | | Diluted EPS | $(0.03) | $0.00 | $(0.03) | $0.04 | - Revenues increased by 10% for Q2 2025 YoY and 34% for H1 2025 YoY[25] - Interest expense significantly increased by 4,461% for Q2 2025 YoY and 7,913% for H1 2025 YoY, primarily due to debt discount amortization and accrued interest[25] - Selling, general and administrative expenses increased by 24% for Q2 2025 YoY and 43% for H1 2025 YoY[25] Consolidated Statement of Shareholders' Equity The consolidated statement of shareholders' equity shows a substantial increase in total equity for GMGI for H1 2025, driven by additional paid-in capital and positive translation adjustments, despite a net loss Shareholders' Equity Changes (Six Months Ended June 30, 2025) | Metric | December 31, 2024 (USD) | June 30, 2025 (USD) | | :--- | :--- | :--- | | Common Stock (shares) | 129,242,993 | 139,117,131 | | Common Stock (amount) | $1,292 | $1,391 | | Additional Paid-in Capital | $50,313,125 | $70,395,979 | | Accumulated Other Comprehensive Income (Loss) | $(8,089,854) | $(2,520,276) | | Accumulated Earnings | $57,046,892 | $53,161,057 | | Total Shareholders' Equity of GMGI | $105,072,994 | $121,279,092 | - Shares issued for debt conversion: 5,804,544 shares, adding $11,237,408 to additional paid-in capital[28] - Shares issued under ATM Program: 374,919 shares, generating $662,596 in additional paid-in capital[28] - Fair value of stock-based compensation: $1,898,143 recognized in additional paid-in capital[28] - Cumulative translation adjustment: $5,569,578 positive impact on accumulated other comprehensive income (loss)[28] Consolidated Statements of Cash Flow For H1 2025, the Company generated significant operating cash flow but experienced substantial outflows from investing and financing activities, primarily due to debt repayments, resulting in a net decrease in cash Consolidated Cash Flow Highlights (Six Months Ended June 30) | Cash Flow Activity | 2025 (USD) | 2024 (USD) | | :--- | :--- | :--- | | Net (loss) income | $(3,990,108) | $3,964,648 | | Net cash provided by operating activities | $10,117,167 | $2,553,394 | | Net cash used in investing activities | $(11,903,508) | $(11,186,276) | | Net cash provided by (used in) financing activities | $(14,301,175) | $23,166,197 | | Effect of exchange rate changes on cash | $8,097,891 | $(2,108,867) | | Net increase (decrease) in cash and cash equivalents | $(7,989,625) | $12,424,448 | | Cash and cash equivalents at end of the quarter | $22,136,319 | $32,829,744 | - Operating cash flow increased significantly in 2025, driven by non-cash adjustments and changes in working capital[38][40] - Investing activities in 2025 included $5.98 million for intangible assets and $3.57 million for property, plant and equipment[38][40] - Financing activities in 2025 were dominated by $15.06 million in debt repayments, partially offset by $1.17 million in loan proceeds and $0.63 million from stock sales[38][40] Notes to the Consolidated Financial Statements This section provides detailed explanations and disclosures for the consolidated financial statements, covering accounting policies, asset/liability balances, acquisitions, equity, segment reporting, and contingencies NOTE 1 - BASIS OF PRESENTATION AND ACCOUNTING POLICIES This note outlines the Company's operations, including online betting and iGaming SaaS, reiterates the MeridianBet Group reverse merger and fiscal year-end change, and describes key accounting policies - The Company operates online sports betting, online casino, and gaming in over 15 jurisdictions, provides iGaming SaaS solutions, and offers pay-to-enter prize competitions[42][43] - The MeridianBet Group acquisition on April 9, 2024, was accounted for as a reverse merger, making MeridianBet Group the accounting acquirer and its historical financials the predecessor[44][48] - Fiscal year end changed from October 31 to December 31[9] - Consolidated financial statements include wholly-owned and majority-owned subsidiaries, eliminating intercompany balances[51] - Goodwill is tested for impairment annually at the reporting unit level (Golden Matrix and MeridianBet Group)[68] Foreign Currency Translation Adjustments | Period | 2025 (USD) | 2024 (USD) | | :--- | :--- | :--- | | Three Months Ended June 30 | $4,198,530 | $(301,263) | | Six Months Ended June 30 | $5,569,578 | $(2,105,943) | NOTE 2 – ACCOUNTS RECEIVABLE, NET This note details the Company's net accounts receivable, which increased from $6.06 million to $7.09 million from December 2024 to June 2025, primarily from online gaming content resale and B2B services Accounts Receivable, Net | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Accounts receivable, net | $7,090,854 | $6,061,281 | | Allowance for doubtful accounts | $1,011,841 | $994,329 | - Receivables from resale of online gaming content and B2B services increased to $4,238,202[99][100] - Receivables from payment providers in Bosnia amounted to $1,577,677[99][100] NOTE 3 – ACCOUNTS RECEIVABLE – RELATED PARTY This note discloses accounts receivable from related parties, which decreased from $666,545 to $556,789 from December 2024 to June 2025, including amounts from Top Level doo Serbia and Network System Development GMBH Accounts Receivable – Related Parties | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Accounts receivable – related parties | $556,789 | $666,545 | - The largest amount due from a related party is Top Level d.o.o. Serbia, totaling $294,341 as of June 30, 2025[175] NOTE 4 – TAXES RECEIVABLE Taxes receivable, including corporate income, VAT, and municipality taxes, slightly decreased from $734,630 to $717,162 from December 2024 to June 2025 Taxes Receivable Components | Description | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Corporate income taxes receivable | $491,408 | $310,424 | | VAT refund receivables | $70,242 | $286,031 | | Municipality taxes refund receivable | $155,512 | $138,175 | | Total taxes receivable | $717,162 | $734,630 | NOTE 5 – PREPAID EXPENSES Prepaid expenses increased from $955,456 to $1,190,083 from December 2024 to June 2025, driven by higher prepayments to suppliers, partially offset by reduced license and advertising costs Prepaid Expenses Components | Description | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Prepayments to suppliers | $394,195 | $39,239 | | Prepaid license | $189,388 | $443,355 | | Prepaid sponsorship/advertising | $279,149 | $363,835 | | Other prepayments | $309,905 | $91,995 | | Total prepaid assets | $1,190,083 | $955,456 | NOTE 6 – OTHER CURRENT ASSETS Other current assets slightly decreased from $2,584,771 to $2,514,355 from December 2024 to June 2025, mainly due to lower other current receivables, partially offset by increased accrued income Other Current Assets Components | Description | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Other current receivables | $1,023,540 | $1,315,276 | | Accrued income | $1,281,489 | $1,068,075 | | Employee receivables | $396,580 | $314,865 | | Allowance for bad debt | $(532,196) | $(443,747) | | Total other current assets | $2,514,355 | $2,584,771 | - The total allowance for bad debt increased to $532,196, primarily related to impairment of receivables at My Best Odds Belgium and Atlas Bank[106] NOTE 7– ACQUISITIONS This note details several acquisitions, including MeridianBet Group, Classics Holdings, and Media Games Malta, along with minority interests, outlining consideration paid and financial impact - The Meridian Purchase of MeridianBet Group was completed on April 9, 2024, for approximately $107.9 million, including common stock, preferred stock, cash, and promissory notes[220] - Classics Holdings (80% ownership) acquisition was effective August 1, 2024, recognizing approximately $6.35 million in goodwill[108][110] - Media Games Malta (100% ownership) acquisition was completed on July 11, 2024, recognizing approximately $537,184 of goodwill[114][115] - Acquisition of minority interests in Meridian Gaming S.A.C. Peru (24.5%) and Meridian Worldwide Ltd. Cyprus (15.5%) involved issuance of restricted common stock and cash payments[117][118][119][120] Pro-forma Total Revenues and Net Income Attributable to GMGI (Six Months Ended June 30, 2024) | Metric | Amount (USD) | | :--- | :--- | | Pro-forma total revenues | $82,384,511 | | Pro-forma net income (loss) attributable to GMGI | $2,477,996 | NOTE 8 – INTANGIBLE ASSETS – SOFTWARE, LICENSES, TRADEMARKS, DEVELOPED TECHNOLOGY, CUSTOMER RELATIONSHIPS, AND NON-COMPETE AGREEMENTS This note details the Company's intangible assets, including software and licenses; net definite-lived intangible assets increased from $56.39 million to $57.76 million from December 2024 to June 2025, with significant amortization Net Definite-Lived Intangible Assets | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Net definite-lived intangible assets | $57,758,135 | $56,393,457 | - Software development costs capitalized: $1,146,753 for the six months ended June 30, 2025[124] - Intangible construction in process (new sports betting platform) capitalized: $4,830,127 for the six months ended June 30, 2025[125] - Amortization expenses for intangible assets: $4,618,020 for the six months ended June 30, 2025 (up 96% from $2,355,366 in 2024)[128][313] Estimated Future Amortization Expenses | Year Ending December 31, | Estimated Amortization (USD) | | :--- | :--- | | 2025 | $11,662,252 | | 2026 | $11,706,759 | | 2027 | $11,304,857 | | 2028 | $10,869,506 | | 2029 | $7,020,825 | | Thereafter | $5,193,936 | | Total future amortization | $57,758,135 | NOTE 9 – PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment, net, increased from $27.43 million to $29.12 million from December 2024 to June 2025, with $2.78 million in depreciation expenses for H1 2025 Property, Plant and Equipment, Net | Description | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Buildings, net | $10,173,772 | $9,190,949 | | Slots and machines, net | $11,849,410 | $11,065,973 | | Total property, plant and equipment, net | $29,123,714 | $27,431,207 | - Depreciation expenses for the six months ended June 30, 2025, were $2,780,271, an increase from $2,028,263 in the prior year[131] NOTE 10 – DEPOSITS AND NON-CURRENT PREPAID ASSETS Deposits and non-current prepaid assets increased from $5.71 million to $6.19 million from December 2024 to June 2025, primarily comprising retail and internet betting deposits Deposits and Non-Current Prepaid Assets | Description | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Deposits for rent & office leases | $340,330 | $183,596 | | Deposits for retail betting | $2,828,458 | $2,522,993 | | Deposits for internet betting | $865,698 | $1,082,621 | | Other deposits | $2,143,772 | $1,903,444 | | Total deposits and prepaid assets | $6,189,912 | $5,706,319 | - Betting and casino deposits are held with banks as security for operating permissions, with some accruing interest[134][136] NOTE 11 – INVESTMENTS The Company's equity method investments in unconsolidated entities increased from $218,147 to $244,465 from December 2024 to June 2025, including stakes in Lottery RS and Telekom Srpske Investments in Unconsolidated Entities | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Total Investments | $244,465 | $218,147 | - Investments are accounted for under the equity method, recognizing initial cost and proportionate share of profits/losses[137] NOTE 12 – OPERATING LEASE RIGHT OF USE ASSETS AND LIABILITIES The Company's operating lease right-of-use assets were $6.72 million and total lease liabilities were $6.69 million as of June 30, 2025, reflecting a decrease from December 2024 Operating Lease Assets and Liabilities | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Operating lease right-of-use assets | $6,719,981 | $7,643,504 | | Current portion of operating lease liability | $2,428,729 | $2,378,896 | | Non-current portion of operating lease liability | $4,266,105 | $5,193,847 | | Present value of lease liability | $6,694,834 | N/A | - Lease cost for the six months ended June 30, 2025, was $1,839,612, an increase from $1,674,651 in the prior year[141] NOTE 13 – ACCOUNTS PAYABLE – RELATED PARTIES Accounts payable to related parties significantly increased from $19,655 to $440,720 from December 2024 to June 2025, primarily due to accrued management salaries and bonuses Accounts Payable – Related Parties | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Accounts payable – related parties | $440,720 | $19,655 | NOTE 14 – TAXES PAYABLE Taxes payable, including stamps, duties, and corporate income tax, slightly decreased from $3,774,418 to $3,644,543 from December 2024 to June 2025 Taxes Payable Components | Description | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Stamps, duties and other taxes | $2,600,459 | $2,369,595 | | Corporate income tax payable | $1,044,084 | $1,404,823 | | Total taxes payable | $3,644,543 | $3,774,418 | NOTE 15 – LONG TERM LIABILITIES Long-term liabilities significantly decreased from $31.66 million to $22.51 million from December 2024 to June 2025, primarily due to Unicredit Bank facility repayments and the Lind Global Note payoff Long Term Liabilities | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Total long term liabilities | $22,506,255 | $31,655,487 | | Current portion of long-term loan | $11,178,710 | $17,291,241 | | Non-current portion of long-term loan | $11,327,545 | $14,364,246 | - Unicredit Bank Facility: Principal balance decreased to $18,037,572 at June 30, 2025, with $5,134,487 paid in H1 2025[150][163] - Hipotekarna Bank Facility: Principal balance decreased to $907,994 (long-term) and $593,519 (short-term) at June 30, 2025[156][163] - Igor Salindrija Facility: Principal balance increased to $2,334,000 at June 30, 2025[158][159] - Lind Global Asset Management Secured Convertible Note: Fully paid off as of June 30, 2025, with $9,600,000 paid in H1 2025[163] NOTE 16 – OTHER LIABILITIES Other current liabilities increased from $1.09 million to $1.23 million from December 2024 to June 2025 due to staff costs, while non-current liabilities decreased from $6.66 million to $6.13 million due to deferred tax reductions Other Current Liabilities | Description | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Staff costs payable | $758,018 | $577,788 | | Customer deposit | $312,655 | $239,061 | | Total other current liabilities | $1,230,606 | $1,090,063 | Other Non-Current Liabilities | Description | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Deferred tax liabilities | $6,113,002 | $6,607,355 | | Total other non-current liabilities | $6,132,222 | $6,658,377 | NOTE 17 – RELATED PARTY TRANSACTIONS This note details related party transactions, including no dividends paid to Meridian Sellers in H1 2025, and receivables from Articulate Pty Ltd., Elray Resources Inc., Top Level doo Serbia, and Network System Development GMBH Dividends Paid to Meridian Sellers (Six Months Ended June 30) | Owner | 2025 (USD) | 2024 (USD) | | :--- | :--- | :--- | | Aleksandar Milovanović | $0 | $468,694 | | Zoran Milošević | $0 | $165,562 | | Snežana Božović | $0 | $5,450 | | Total dividends paid | $0 | $769,534 | - Receivable from Articulate Pty Ltd. (50% owned by CEO's wife and CEO) was $132,072 as of June 30, 2025, following license agreement termination[170] - Revenues from Elray Resources Inc. (CEO and COO are directors) were $13,907 for H1 2025, with a receivable of $13,648[174] - Receivables from Top Level doo Serbia and Network System Development GMBH totaled $298,979 and $317,125 respectively, as of June 30, 2025[175] NOTE 18 - EQUITY This note details the Company's equity structure, highlighting significant common stock transactions in H1 2025, including issuances for minority interest acquisitions, debt conversions, and ATM Program sales, alongside stock option and RSU activity Common Stock Outstanding | Metric | June 30, 2025 (Shares) | December 31, 2024 (Shares) | | :--- | :--- | :--- | | Authorized Shares | 300,000,000 | 300,000,000 | | Issued and Outstanding Shares | 139,117,131 | 129,242,993 | - Issued 1,071,101 shares for 15.5% minority interest in Meridian Worldwide CY Limited[182] - Issued 814,768 shares for 24.5% minority interest in Meridian Gaming Peru S.A.C.[183] - Converted $501,591 of Deferred Cash Convertible Promissory Note into 250,796 common shares[184] - Converted $1,165,358 of Remaining Contingent Cash into 647,422 common shares[186] - Converted $9,445,460 owed to Milovanović into 4,843,826 shares at $1.95 per share[187] - Issued 206,634 shares to Classics Sellers to satisfy a $518,650 True-Up Amount[188] - Sold 374,919 shares under the ATM Program for net proceeds of approximately $662,600 in H1 2025[194] Stock Option and RSU Activity (Six Months Ended June 30, 2025) | Metric | Stock Options Outstanding (Shares) | RSUs Outstanding (2022 Plan, Shares) | RSUs Outstanding (2023 Plan, Shares) | | :--- | :--- | :--- | :--- | | Balance as of Dec 31, 2024 | 490,000 | 1,837,570 | 10,000 | | Granted | - | - | 1,553,500 | | Forfeited | (50,000) | (8,875) | (40,000) | | Exercised/Vested | (60,000) | - | (205,500) | | Balance as of June 30, 2025 | 380,000 | 1,828,695 | 1,318,000 | NOTE 19 – SEGMENT REPORTING AND GEOGRAPHIC INFORMATION The Company operates three reportable segments: MeridianBet Group, GMAG, and RKings & CFAC, with Europe as the largest geographic revenue contributor, followed by the UK and Africa - MeridianBet Group: Retail and online sports betting, casinos, and bars in Europe, Africa, Central and South America[209] - GMAG: iGaming SaaS solutions and third-party gaming content resale, primarily in Asia-Pacific[209] - RKings & CFAC: Pay-to-enter prize competitions in the UK (RKings) and trade promotions in Australia (Classics for a Cause)[209] Segment Income from Operations (Six Months Ended June 30, 2025) | Segment | Revenues (USD) | Segment Gross Profit (USD) | Segment Income from Operations (USD) | | :--- | :--- | :--- | :--- | | MeridianBet Group | $56,934,460 | $40,360,015 | $8,055,943 | | GMAG | $7,471,339 | $2,277,903 | $249,676 | | RKings & CFAC | $21,562,622 | $6,023,665 | $1,468,524 | | Total | $85,968,421 | $48,661,583 | $9,774,143 | Revenues by Geographic Region (Six Months Ended June 30, 2025) | Region | Revenue (USD) | % of Total | | :--- | :--- | :--- | | Europe (UK-Excl.) | $46,981,218 | 55% | | UK | $17,227,980 | 20% | | Africa | $6,912,209 | 8% | | Asia Pacific (Australia Excl.) | $6,390,922 | 7% | | Australia | $4,334,642 | 5% | | Central and South America | $4,121,450 | 5% | | Total | $85,968,421 | 100% | NOTE 20 – EFFECTIVE TAX RATE The Company's effective tax rate for Q2 and H1 2025 was (16.3)% and (4.0)%, respectively, a decrease from 2024, primarily due to shifts in earnings and tax expenses between the U.S. and foreign countries Effective Tax Rate | Period | June 30, 2025 (%) | June 30, 2024 (%) | | :--- | :--- | :--- | | Three Months Ended | (16.3)% | 97.1% | | Six Months Ended | (4.0)% | 16.9% | - The decrease in the effective income tax rate is primarily due to changes in the mix of earnings and tax expenses between the U.S. and foreign countries[211] NOTE 21 - COMMITMENTS AND CONTINGENCIES This note outlines the Company's legal disputes, including a minority owner dispute, a Greek tax dispute with a $1,468,472 accrued expense, and a contested RKings acquisition holdback payment - Involved in a dispute with minority owners of Fair Champions Meridian Ltd. Cyprus, potentially leading to liquidation or buyout[214] - Engaged in a tax dispute with Greek tax authorities for tax years 2012-2014, with an accrued tax expense of $1,468,472 as of December 31, 2024[216] - Dispute with Mr. Paul Hardman regarding a contested $626,450 (GBP 500,000) holdback payment from the RKings acquisition, accrued in liabilities[217] - The Company is also involved in various labor and tax-related disputes in the ordinary course of business, none of which are expected to have a material impact[218] NOTE 22 - MERIDIANBET GROUP PURCHASE AGREEMENT This note details the MeridianBet Group acquisition, completed on April 9, 2024, for approximately $107.9 million, resulting in Meridian Sellers becoming majority shareholders and significant intangible asset recognition - Total preliminary purchase consideration for MeridianBet Group was approximately $107.9 million[220] - Consideration included 82,141,857 common shares, 1,000 Series C Preferred Stock shares, $12 million in cash, and $15 million in promissory notes[220] - Approximately $30.2 million in intangible assets and $64.4 million of goodwill were recognized[221] - Meridian Sellers became majority shareholders, holding approximately 69.2% of outstanding common stock and 67.0% of voting power[221] NOTE 23 – SUBSEQUENT EVENTS Subsequent to June 30, 2025, the Company issued 45,000 unregistered shares for services and sold 320,934 additional shares under its ATM Program, generating approximately $535,560 in net proceeds - 45,000 unregistered shares of restricted common stock, valued at $83,700, were issued for services subsequent to June 30, 2025[223] - An additional 320,934 shares were sold under the ATM Program for approximately $535,560 in net proceeds after June 30, 2025[224] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's analysis of the Company's financial condition and results of operations, covering business segments, liquidity, capital resources, and performance comparisons for Q2 and H1 2025 versus 2024 General Information This sub-section reiterates that financial information reflects MeridianBet Group as the predecessor due to the April 1, 2024, reverse merger and highlights the forward-looking nature of statements - Historical financial information in this report represents MeridianBet Group as the predecessor to Golden Matrix Group, Inc. due to the reverse merger effective April 1, 2024[228] - Statements in this section are subject to forward-looking statements and various risks, as detailed elsewhere in the report[229] Our Business The Company operates three main business lines: online sports betting and casino in Europe, Africa, and Central/South America; iGaming SaaS solutions for Asia-Pacific; and prize competitions in the UK and Australia - Operates online sports betting, online casino, and gaming in over 15 jurisdictions, including approximately 700 betting shops (250 owned, 450 franchised)[230][231] - Offers a comprehensive sports betting portfolio covering over 800 leagues and 11 million bets monthly, utilizing proprietary technology for odds setting and risk management[232] - Provides a diverse gaming portfolio including in-house developed casino games (Expanse Studios) and titles from third-party providers[235] - Develops and owns iGaming intellectual property and builds configurable, scalable, turn-key, and white-label gaming platforms (GM-X and GM-Ag Systems) for Asia-Pacific customers, with expansion plans for Europe, U.S., South America, and Africa[237][238][244][245] - Engages in pay-to-enter prize competitions in the UK (RKingsCompetitions Ltd.) and online trade promotions in Australia (Classics For A Cause Pty Ltd)[250][253] Cash Requirements, Liquidity and Capital Resources As of June 30, 2025, the Company had $22.14 million in cash and a $24.60 million working capital deficit, primarily due to current debt, with potential future funding needs for growth, acquisitions, and repayments Liquidity and Capital Resources | Metric | June 30, 2025 (USD) | December 31, 2024 (USD) | | :--- | :--- | :--- | | Cash and cash equivalents | $22,136,319 | $30,125,944 | | Working capital (deficit) | $(24,599,062) | $(18,484,062) | | Shareholders' equity | $124,982,523 | $108,950,580 | - Working capital deficit mainly due to $11.18 million current portion of long-term loans and $25.17 million consideration payable to Meridian Sellers[254][256] - Decrease in cash of $7,989,625 between December 31, 2024, and June 30, 2025, primarily due to debt repayment[258] - Material cash requirements include $10,174,300 cash due to Meridian Sellers by October 9, 2025, and $15,000,000 in promissory notes due by April 9, 2026[259][260] - Company may sell up to an additional $18.76 million in common stock under its Equity Distribution Agreement[278] Adjusted EBITDA – Adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization This section presents EBITDA and Adjusted EBITDA as non-GAAP measures; Adjusted EBITDA for H1 2025 was $9.06 million, a decrease from $11.32 million in the prior year, reflecting net income and non-cash adjustments - EBITDA and Adjusted EBITDA are non-GAAP financial measures used to assess performance and for incentive compensation programs[279][280] Reconciliation of EBITDA and Adjusted EBITDA to Net Income (Loss) | Metric | Three Months Ended June 30, 2025 (USD) | Three Months Ended June 30, 2024 (USD) | Six Months Ended June 30, 2025 (USD) | Six Months Ended June 30, 2024 (USD) | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $(3,731,891) | $15,626 | $(3,990,108) | $3,964,648 | | EBITDA | $2,032,675 | $3,243,124 | $6,454,716 | $9,087,250 | | Adjusted EBITDA | $3,448,989 | $5,428,162 | $9,061,289 | $11,318,651 | - Adjusted EBITDA decreased by $2,257,362 for the six months ended June 30, 2025, compared to the same period in 2024[282] Results of Operations The Company experienced significant revenue growth in Q2 and H1 2025, driven by online casino, sports betting, and acquisitions, but this was offset by substantial increases in G&A and interest expenses, leading to a net loss Three months ended June 30, 2025, compared to the three months ended June 30, 2024. For Q2 2025, revenues increased by 10% to $43.25 million, driven by online casino and sports betting, but a 24% increase in G&A and 4,461% surge in interest expense led to a $3.58 million net loss Q2 2025 vs Q2 2024 Financial Performance | Metric | June 30, 2025 (USD) | June 30, 2024 (USD) | $Change (USD) | %Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $43,245,368 | $39,415,242 | $3,830,126 | 10% | | Gross profit | $24,377,019 | $21,685,542 | $2,691,477 | 12% | | General and administrative expenses | $26,681,869 | $21,560,430 | $5,121,439 | 24% | | Interest expense | $1,481,669 | $32,484 | $1,449,185 | 4,461% | | Net income (loss) attributable to GMGI | $(3,584,345) | $64,925 | $(3,649,270) | -5,621% | - Online casino revenue increased by 29% due to expanded game offerings and new providers[285] - Online sports betting revenue increased by 10% due to the launch of the ATLAS platform and improved live betting features[285] - Classics for a Cause contributed $2,029,926 in revenue, as it was acquired in August 2024[294] - Marketing expenses increased by 50% due to increased budgets and new sponsorship agreements[294] Six months ended June 30, 2025, compared to the six months ended June 30, 2024. For H1 2025, revenues surged by 34% to $85.97 million, driven by online casino, sports betting, and acquisitions, but G&A expenses rose 43% and interest expense 7,913%, leading to a $3.82 million net loss H1 2025 vs H1 2024 Financial Performance | Metric | June 30, 2025 (USD) | June 30, 2024 (USD) | $Change (USD) | %Change | | :--- | :--- | :--- | :--- | :--- | | Revenue | $85,968,421 | $64,265,829 | $21,702,592 | 34% | | Gross profit | $48,572,980 | $39,377,472 | $9,195,508 | 23% | | General and administrative expenses | $50,983,847 | $35,558,239 | $15,425,608 | 43% | | Interest expense | $2,953,029 | $36,855 | $2,916,174 | 7,913% | | Net income (loss) attributable to GMGI | $(3,815,953) | $4,055,659 | $(7,871,612) | -194% | - Online casino revenue increased by 23% due to expanded game offerings and new providers[307] - Online sports betting revenue increased by 10% due to the launch of the ATLAS platform and improved live betting features[307] - GMAG, RKings, and Classics for a Cause segments showed significant revenue increases due to the Golden Matrix acquisition becoming effective April 1, 2024[307] - Salaries and wages increased by 37% due to increased headcount and salaries, including Golden Matrix employees post-acquisition[314] - Marketing expenses increased by 70% due to expanded advertising budgets and new sponsorship agreements[315] CRITICAL ACCOUNTING POLICIES AND ESTIMATES This section emphasizes that financial statement preparation requires significant management estimates for bad debts, accrued liabilities, goodwill, and contingencies, with no material changes to critical accounting policies since the 2024 Annual Report - Preparation of financial statements requires significant management estimates and assumptions, including for contingent liability, stock-based compensation, warrant valuation, accrued expenses, and collectability of accounts receivable[54][324] - No material changes to critical accounting policies have occurred as of June 30, 2025, from those disclosed in the 2024 Annual Report[325] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a 'smaller reporting company,' Golden Matrix Group, Inc. is exempt from providing detailed quantitative and qualitative disclosures about market risk under Regulation S-K Item 305(e) - The Company is exempt from providing detailed market risk disclosures as it is a 'smaller reporting company'[326] Item 4. Controls and Procedures The CEO and CFO concluded the Company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter, acknowledging inherent system limitations - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[327] - No material changes in internal control over financial reporting occurred during the three months ended June 30, 2025[328] - Management recognizes that controls and procedures provide only reasonable assurance due to resource constraints and judgment application[329] PART II. OTHER INFORMATION Item 1. Legal Proceedings The Company is not a party to any material legal proceedings, except those in Note 21, and management believes current proceedings will not materially adversely affect its financial position - The Company is not currently a party to any material legal proceeding, other than those referenced in Note 21[330] - Management believes the ultimate resolution of current proceedings will not have a material adverse effect on the Company's financial position, results of operations, or cash flows[330] Item 1A. Risk Factors This section updates risk factors, highlighting potential needs for additional financing, future equity sales dilution, and common stock market volatility, noting that prior risks related to the Secured Convertible Note are no longer material due to its repayment - The Company may require additional financing to support operations, complete acquisitions, and repay outstanding debt, including $18.0 million owed under the Unicredit Bank Facility and MeridianBet Group acquisition post-closing amounts[333][334] - Future sales of equity capital, including through the Equity Distribution Agreement, will result in dilution to existing shareholders[335][337] - The market for the Company's common stock is currently illiquid and volatile, with prices potentially unrelated to actual value, and future sales or warrant exercises could cause further decline and dilution[345][350][352][353] - Risks related to the Secured Convertible Note with Lind Global Asset Management VIII LLC are no longer material as the note was voluntarily repaid in full on April 28, 2025[361] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details unregistered equity sales during and after Q2 2025, primarily restricted common stock issued to consultants and Classics Sellers, with exemption claimed under Section 4(a)(2), Rule 506(b), and/or Regulation S - Issued 10,000 shares of restricted common stock to a consultant on April 2, 2025[363] - Issued 20,000 shares of restricted common stock to a consultant on April 3, 2025[364] - Issued 206,634 shares to Classics Sellers on April 28, 2025, to satisfy a $518,650 True-Up Amount[365] - Issued 20,000 shares of restricted common stock to a consultant on April 30, 2025[366] - Issued 10,000 shares of restricted common stock to a consultant on May 1, 2025[367] - Issued 20,000 shares of restricted common stock to a consultant on May 5, 2025[368] - Issued 45,000 shares of restricted common stock to a consultant on June 30, 2025[369] - Issued 45,000 shares of restricted common stock to a consultant on July 31, 2025 (subsequent event)[371] - Exemption from registration is claimed under Section 4(a)(2), Rule 506(b), and/or Regulation S of the Securities Act, with shares issued to accredited investors or non-U.S. persons[372] - No share repurchase activity occurred during April, May, or June 2025 under the $5.0 million share repurchase program, which expired on July 15, 2025[373][375] Item 3. Defaults Upon Senior Securities The Company reported no defaults upon senior securities during the period - There were no defaults upon senior securities[376] Item 4. Mine Safety Disclosures This item is not applicable to the Company - This item is not applicable[376] Item 5. Other Information This section incorporates Item 2 disclosures on unregistered equity sales and confirms no Rule 10b5-1 trading plan adoptions or terminations by directors or executive officers during Q2 2025 - Information on unregistered sales of equity securities from Item 2 is incorporated by reference[377] - No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during the quarter ended June 30, 2025[378] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including amendments to the Meridian Purchase Agreement, share exchange agreements, equity incentive plans, debt conversion agreements, and certifications - The exhibits include amendments to the Meridian Purchase Agreement, Share Exchange Agreement for Classics Holdings, Equity Distribution Agreement, and various certifications[379][380]