Golden Matrix (US:GMGI)2023-06-14 12:00Company Overview - As of April 30, 2023, the company has over 7.2 million registered players and more than 710 unique casino and live game operations across its platforms [283]. - RKings has over 297,000 registered users, and GMG Assets has completed 67 transactions since November 1, 2022, generating $2,653,681 in revenues and $98,141 in net income [285]. - The online casino in Mexico, branded as Mexplay, commenced generating revenues in March 2023, with over 7,000 registered users and $19,910 in revenues for the six months ended April 30, 2023 [286]. Financial Position - The company's cash balance as of April 30, 2023, is $15,753,813, with no expected future cash demands other than ongoing operations for the next 12 months [299]. - As of April 30, 2023, the company has cash of $15,753,813, receivables of $3,919,832, and inventory of $1,862,528, with total liabilities of $3,946,888 [307]. - Cash and cash equivalents as of April 30, 2023, were $15,753,813, an increase from $14,949,673 as of October 31, 2022 [394]. - The Company is self-sustaining and does not currently require additional liquidity, although it may consider raising funds for expansion or acquisitions if necessary [399]. Acquisition Plans - The company intends to pursue strategic acquisitions, including the pending Meridian Purchase Agreement, which may require additional funding [300]. - The company is required to raise a total of $70 million for the Meridian Purchase Agreement, including a cash payment of $50 million due at the Phase 1 Closing [304][306]. - The Phase 1 Closing is mandated to occur before June 30, 2023, while the Phase 2 Closing must take place before October 31, 2023 [302][320]. - The acquisition involves the purchase of 100% of the outstanding capital stock of the Meridian Companies, excluding Meridian Serbia, and 90% of Meridian Serbia in Phase 1 [319][320]. - The company plans to fund the acquisition through debt financing, although no loan agreements have been established to date [310]. Revenue and Growth - Total revenues for the three months ended April 30, 2023, were $10,308,359, compared to $8,482,743 for the same period in 2022, representing an increase of approximately 21.5% [343]. - Revenues from third-party gaming content reselling increased to $3,581,953 in Q2 2023 from $3,153,257 in Q2 2022, reflecting a growth of about 13.6% due to an increased number of customers and registered players [339]. - Revenues from prize competitions rose to $6,488,466 in Q2 2023, up from $5,117,108 in Q2 2022, marking an increase of approximately 26.6%, with $1,438,165 derived from facilitating cash alternative offers [341]. - The Company generated revenues from prize competitions of $13,041,688 for the six months ended April 30, 2023, compared to $10,613,383 for the same period in 2022, an increase of $2,428,305 [371]. - Revenues from reselling third-party gaming content increased to $7,617,029 for the six months ended April 30, 2023, from $6,295,960 in the same period in 2022, an increase of $1,321,069 [369]. Expenses and Profitability - EBITDA for the three months ended April 30, 2023, was reported at $451,907, compared to $1,123,718 for the same period in 2022 [317]. - Total costs of goods sold for the six months ended April 30, 2023, were $16,583,022, compared to $12,795,183 for the same period in 2022, representing an increase of $3,787,839 [379]. - Gross profit for the six months ended April 30, 2023, was $4,503,016, a decrease of $61,649 from $4,564,665 in the same period in 2022 [380]. - Gross profit margin decreased to 21% for the six months ended April 30, 2023, down from 26% for the same period in 2022, primarily due to challenges in the B2C segment [381]. - General and administrative expenses for the six months ended April 30, 2023, were $3,860,484, an increase of $797,511 from $3,062,973 in the same period in 2022 [383]. Market Conditions and Risks - Economic conditions in the global, Asia Pacific, UK, and Mexico markets may impact consumer spending, particularly in entertainment and gaming sectors [288]. - The company believes it can maintain resilience through economic downturns and has sufficient liquidity to meet its financial obligations [289]. - There are no known trends or uncertainties that are likely to materially decrease the company's liquidity [307]. Strategic Focus - The company aims to expand its customer base globally and integrate additional operators while launching synergistic products [284]. - The company is actively pursuing new gaming distributors and expanding its market presence in developing regions such as Africa and Latin America [305]. - The company is also exploring acquisitions of synergistic companies to enhance its competitive position in the market [305]. - The Company expects to consolidate several operating aspects to generate increased gross profit and gross profit margin due to economies of scale [352]. - The Company plans to focus on increasing profit margins on individual competition prizes moving forward [382]. Employee Incentives - The Company plans to issue $3 million in restricted stock units to incentivize employees of the Meridian Companies post-Phase 1 Closing [326]. Interest and Foreign Exchange - Interest income increased to $16,920 for the three months ended April 30, 2023, compared to $542 for the same period in 2022, an increase of $16,378 [359]. - Interest income rose to $28,825 for the six months ended April 30, 2023, from $983 in 2022, reflecting higher interest rates [387]. - Foreign exchange gain decreased to $33,314 for the six months ended April 30, 2023, down from $198,829 in 2022, due to the depreciation of the US dollar against other currencies [388]. Net Loss - The net loss attributable to the Company was $(977,274) for the six months ended April 30, 2023, a decrease of $1,913,637 compared to a net income of $936,363 in 2022 [393].