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Golden Matrix (GMGI) - 2024 Q4 - Annual Report
GMGIGolden Matrix (GMGI)2025-03-24 11:45

Acquisition and Investments - Golden Matrix Group acquired 100% of MeridianBet Group for a total consideration of 12millionincash,12 million in cash, 15 million in promissory notes, and 82,141,857 restricted shares of common stock[37]. - The Meridian Purchase Agreement includes deferred cash consideration of 18millionduebyApril26,2024,andcontingentpost−closingconsiderationof18 million due by April 26, 2024, and contingent post-closing consideration of 5 million and 5 million restricted shares, contingent on certain conditions[38]. - The company acquired 100% ownership of Global Technology Group Pty Ltd for approximately 113,000,whichholdsanAGCClicenseexpiringonDecember10,2024[29].−GoldenMatrixpurchasedan80113,000, which holds an AGCC license expiring on December 10, 2024[29]. - Golden Matrix purchased an 80% interest in RKingsCompetitions Ltd for an undisclosed amount, with a buyout of minority owners costing 1,323,552 in restricted common stock[30][31]. - The Company entered into a Share Exchange Agreement to acquire an 80% ownership interest in Classics Holdings Co. Pty Ltd., with the transaction closing on August 21, 2024, and an effective date of August 1, 2024[54][58]. - The True-Up Amount related to the Classics acquisition was determined to be 518,650asofFebruary17,2025,andremainsoutstanding[56].−TheClassicsSellersmayearnadditionalcashandstockconsiderationbasedonClassics′totalnetprofitfromtheClosingDateuntilJune30,2025,withamaximumearnoutofAU518,650 as of February 17, 2025, and remains outstanding[56]. - The Classics Sellers may earn additional cash and stock consideration based on Classics' total net profit from the Closing Date until June 30, 2025, with a maximum earnout of AU2,184,000 and 242,391 shares if profits exceed AU3,500,000[57].−TheGM2AssetPurchaseAgreementinvolvedissuing4,166,667sharesofcommonstockandanearn−outpaymentbasedonrevenuesgeneratedfromtheacquiredasset[28].MarketExpansionandOperations−GoldenMatrix′smarketexpansionincludesoperationsinover15jurisdictionsacrossEurope,Africa,andCentralandSouthAmericafollowingtheMeridianacquisition[37].−TheCompanyoperatesonlinesportsbetting,onlinecasino,andgamingoperationsinover15jurisdictionsacrossEurope,Africa,andCentralandSouthAmerica,employingapproximately1,200personnel[62][63].−TheCompanyhasapproximately700company−ownedorfranchisedbettingshops,withabout250ownedbysubsidiariesand450byfranchisees,focusingonsportsbettingandonlinecasinogames[63].−TheCompanyoperatesinmultipleinternationalmarkets,whichhelpsmitigateseasonaldownturnsinsportsbettingbypromotingcasinogames,eSports,andvirtualsportsduringquieterperiods[111][112].−TheCompanyoperatesinmultiplejurisdictions,holdinglicensesforsportsbettingandonlineoperationsincountriessuchasSerbia,Belgium,andBrazil[146][151][154].TechnologyandInnovation−TheCompany′sproprietarytechnologysupportsscalablesystemsacrossmultiplejurisdictionsandcurrencies,ensuringconsistencyinoddssettingandriskmanagement[64].−TheCompanyemploysanomni−channelapproach,allowingconsumerstoaccessofferingsthroughvariousplatforms,includingmobileanddesktopapplications[65].−TheCompanyutilizesmachinelearningtechnologiestopersonalizethebettingexperienceandcontinuouslyupdateodds,reducingtheneedformanualoversight[70][80].−TheCompanyhasimplementedanomni−channelapproach,includingiOS,Android,mobilebrowser,desktop,SMS,SST,andUSSD,tocatertodiversecustomerpreferences[81].−TheCompanyhasongoinginvestmentsinnewproductsandtechnologies,whichareinherentlyriskyandmaynotyieldadequatereturns[216].−TheCompanymayfacechallengesinrespondingtorapidtechnologicalchanges,whichcouldadverselyaffectitsfinancialcondition[217].−Thereareinherentrisksinintroducingnewproductsorupdatedversions,includingpotentialsoftwareerrorsfromsignificantcoderewrites[217].−Customersmayencounterdifficultiesduringtheupgradeprocesstonewertechnologyplatforms,potentiallyleadingtorevenuelossfortheCompany[217].FinancialPerformanceandRisks−TheCompanyhasfacedvariousrisks,includinggamingfraud,technologyfailures,andforeignexchangerisks,whichcouldimpactfutureperformance[23].−TheCompany′sfinancialperformanceisinfluencedbyglobaleconomicconditions,withrisinginterestratesandinflationcreatinguncertaintyaboutconsumerspendinginthegamingandentertainmentsectors[130].−NetincomeattributabletotheCompanydecreasedby3,500,000[57]. - The GM2 Asset Purchase Agreement involved issuing 4,166,667 shares of common stock and an earn-out payment based on revenues generated from the acquired asset[28]. Market Expansion and Operations - Golden Matrix's market expansion includes operations in over 15 jurisdictions across Europe, Africa, and Central and South America following the Meridian acquisition[37]. - The Company operates online sports betting, online casino, and gaming operations in over 15 jurisdictions across Europe, Africa, and Central and South America, employing approximately 1,200 personnel[62][63]. - The Company has approximately 700 company-owned or franchised betting shops, with about 250 owned by subsidiaries and 450 by franchisees, focusing on sports betting and online casino games[63]. - The Company operates in multiple international markets, which helps mitigate seasonal downturns in sports betting by promoting casino games, eSports, and virtual sports during quieter periods[111][112]. - The Company operates in multiple jurisdictions, holding licenses for sports betting and online operations in countries such as Serbia, Belgium, and Brazil[146][151][154]. Technology and Innovation - The Company's proprietary technology supports scalable systems across multiple jurisdictions and currencies, ensuring consistency in odds setting and risk management[64]. - The Company employs an omni-channel approach, allowing consumers to access offerings through various platforms, including mobile and desktop applications[65]. - The Company utilizes machine learning technologies to personalize the betting experience and continuously update odds, reducing the need for manual oversight[70][80]. - The Company has implemented an omni-channel approach, including iOS, Android, mobile browser, desktop, SMS, SST, and USSD, to cater to diverse customer preferences[81]. - The Company has ongoing investments in new products and technologies, which are inherently risky and may not yield adequate returns[216]. - The Company may face challenges in responding to rapid technological changes, which could adversely affect its financial condition[217]. - There are inherent risks in introducing new products or updated versions, including potential software errors from significant code rewrites[217]. - Customers may encounter difficulties during the upgrade process to newer technology platforms, potentially leading to revenue loss for the Company[217]. Financial Performance and Risks - The Company has faced various risks, including gaming fraud, technology failures, and foreign exchange risks, which could impact future performance[23]. - The Company's financial performance is influenced by global economic conditions, with rising interest rates and inflation creating uncertainty about consumer spending in the gaming and entertainment sectors[130]. - Net income attributable to the Company decreased by 15,182,787, or 111%, resulting in a net loss of 1,480,249forthetwelvemonthsendedDecember31,2024,comparedtonetincomeof1,480,249 for the twelve months ended December 31, 2024, compared to net income of 13,702,538 for the same period in 2023[195]. - The Company anticipates needing to raise funding to repay 9,600,000undertheSecuredConvertibleNoteand9,600,000 under the Secured Convertible Note and 20.2 million under the Facility Agreement, as well as post-closing obligations related to the Meridian Purchase Agreement[171]. - The Company may face significant costs related to legal fees for licensing applications and regulatory compliance[135]. - Economic downturns and adverse political conditions could negatively impact consumer demand for the company's products and services[169]. - The Company acknowledges risks related to regulatory changes that could negatively impact its operations and licensing status[166]. - The Company may experience significant dilution to existing shareholders if repayment amounts are made in shares of common stock[197]. Strategic Focus and Growth - The Company is focused on expanding its GM-X and GM-Ag Systems into Europe, the U.S., South America, and Africa, with plans to apply for a gaming license in the U.S.[94]. - The Company aims to maintain sufficient liquidity to fund operations and growth objectives, with plans to meet cash requirements through operations and sales of equity and debt securities[129]. - The Company has a growth strategy focused on strategic acquisitions, with plans to issue additional debt to fund these initiatives[129]. - The Company is committed to responsible gaming, offering tools for players to manage their gaming experiences[83]. - The Company has established revenue-sharing agreements with various third-party casino providers to enhance its gaming content offerings[72]. - The Company operates a B2B franchise model, licensing its proprietary sports betting technology to local partners, diversifying its revenue streams[77]. - The Company has a comprehensive intellectual property portfolio, including proprietary software and registered trademarks, which it believes provides a competitive advantage[107][109]. - The company plans to maintain organic revenue growth across all B2C markets and streamline operations to improve overall margins[138]. Competition and Market Position - The Company faces competition from various operators in its core markets, including Serbia, Montenegro, Malta, and Cyprus, and differentiates itself through advanced betting technologies and superior customer service[113][114][116]. - The Company has implemented strategic measures to protect the market for licensed operators, collaborating with local regulators to prevent unlicensed competition[121]. - The Company faces intense competition in the global entertainment and gaming industries, which may affect its market position and profitability[169]. - Competitors are continuously upgrading their product offerings, necessitating the Company to enhance its technology platform and service offerings[217]. - The Company has a diversified customer base across geographical locations, minimizing revenue instability tied to any specific customer group[122][124]. Financial Obligations and Capital Management - The consideration payable to the Meridian Sellers includes 19,870,460incash,with19,870,460 in cash, with 9,870,460 due 12 months after closing and 10,000,000due18monthsafterclosing,plus10,000,000 due 18 months after closing, plus 15,000,000 in promissory notes due 24 months after closing[175]. - The Facility Agreement requires maintaining a net debt/EBITDA ratio of less than or equal to 3.0x, which was met as of December 31, 2024[185]. - The company has entered into an Equity Distribution Agreement allowing for the sale of up to 20millionincommonstock,althoughnoshareshavebeensoldunderthisagreementtodate[178][181].−TheprincipalbalanceoftheSecuredConvertibleNotewas20 million in common stock, although no shares have been sold under this agreement to date[178][181]. - The principal balance of the Secured Convertible Note was 9,600,000 as of December 31, 2024, secured by a security interest over substantially all of the company's assets[190]. - The company has up to $8.5 million available for sale under its Equity Distribution Agreement to support potential acquisitions[136]. - The Company believes it has sufficient cash on hand to support operations for the foreseeable future, despite anticipated capital needs[214].