Elys Game Technology, Corp.

Elys Game Technology, Corp.

NEW YORK, Nov. 20, 2023 (GLOBE NEWSWIRE) — Elys Game Technology, Corp. (“Elys” or the “Company”) (OTC:ELYS) (BER:3UW), an interactive gaming and sports betting technology company, today provided a business update and reported financial results for the third quarter ended September 30, 2023.

Third Quarter and Recent Operational Highlights

  • Established a multiyear market access agreement with Caesars Entertainment, unlocking access to the Colorado sports betting market. The strategic agreement signals Elys’ first entry into the North American mobile sports betting landscape. Pending regulatory approvals, the Company expects to launch its U.S. mobile sportsbook operations in Colorado in 2024.

  • Introduced www.SportBet.com, the Company’s new online and mobile sports betting brand for the United States market. The “5D by Elys” mobile app is included under the brand, forming a comprehensive sports betting platform with cross-platform compatibility. This development positions Elys’ online sports betting launch under a highly recognizable, consumer-friendly brand.

  • Multigioco, an Elys subsidiary, unveiled its enhanced offerings in Italy with a revamped online casino, sports betting site, and mobile app. The significant relaunch in the Italian market improves player experience with optimized performance, speed, and a robust security profile while also setting the stage for meaningful cost savings by eliminating expenses associated with trading and risk management, platform development, and iGaming aggregation.

  • Secured a third sportsbook location in Washington, D.C., expanding the Company’s footprint in the city and building upon the success of its small business sportsbook business model.

Third Quarter 2023 Financial Results
Results compare 2023 fiscal third quarter end (September 30, 2023) to 2022 fiscal third quarter end (September 30, 2022) unless otherwise indicated.

  • Total revenue decreased 11.8% to $8.5 million from $9.6 million in the prior year. The change is primarily attributable to higher payouts benefiting Elys’ sportsbook customers as well as a decrease in web-based turnover due to a reduction in online casino and poker offerings during the third quarter, thereby reducing our blended revenue conversion. At the end of September 2023, a historically quiet period for sports betting, the Company underwent a platform switchover that provides significantly enhanced online casino and poker offerings for our Italian operations. The switchover had an immaterial impact on online sportsbook revenue that was partially offset by an increase in land-based sportsbook revenue due to the activation of new physical locations. For the first nine months of 2023, total revenue increased by approximately $0.06 million.

  • Total handle (turnover) decreased 2.4% to $162.6 million from $166.5 million in the prior year period. The decrease in handle in the third quarter was due to the reduction in web-based turnover caused by the aforementioned online casino and poker reduction ahead of the platform switchover. For the first nine months of 2023, the total handle increased 2.4% to $585.8 million consistent with the Company’s growth expectations.

  • Operating expenses decreased 10.2% to $11.4 million from $12.7 million in the prior year period. The change is primarily attributable to decreases in general and administrative costs as well as a reduction in technology development costs. For the first nine months of 2023, overall operating costs continued to downtrend, with a reduction of $0.13 million, reflecting management’s commitment to profitability, despite the additional expenses incurred for U.S. and Canadian facing investments during the first nine months of 2023.

  • Net loss from continuing operations was $(3.2) million, or $(0.10) per share, compared to $(3.8) million, or $(0.14) per share, in the prior year period. The change is primarily attributable to the decrease in loss from operations, despite lower revenues and a reduction in other non-operating expenses of $0.3 million compared to the prior year period. For the first nine months of 2023, net loss was $(9.1) million, or $(0.27) per share, compared to $(11.1) million, or $(0.41) per share, in the prior year period.

  • Cash and cash equivalents were $2.6 million at September 30, 2023, compared to $3.4 million at December 31, 2022.

Management Commentary
“In Q3, we laid critical foundations for a large-scale expansion into the rapidly growing online sports betting market in the United States and Canada,” said Mike Ciavarella, Executive Chairman of Elys Game Technology Corp. “Over the past few years, we have executed our go-to-market strategy by making significant investments related to our product platform and infrastructure development for our future commercial operations in North America. Elys now stands at the inflection point where these investments begin to convert into revenues in 2024.

“Our www.SportBet.com website, complemented by our advanced platform and recent market access partnership with Caesars Entertainment, equips us to attract players nationwide over the coming quarters. The impending launch in Colorado serves as our initial online sports betting market entry point, and we regard our partnership with Caesars as a gateway to future opportunities in other states. At the same time, we are maintaining our solid and stable operations in the Italian market, where we recently introduced a revamped platform and all-new product lineup. This platform not only enhances the overall player experience but also incorporates changes that significantly reduce expenses and puts our Multigioco subsidiary on track to meet the Company’s profit goals through 2024.

“As we begin our strategic rollout into the vast addressable online sports betting market in the United States, we are confident in our ability to replicate our Italian success story. The U.S. sports betting opportunity contains decades of pent-up demand, and we expect to carve out significant market share with our ‘best odds’ approach and user-friendly platform as our experience in Italy demonstrates. Our measured and strategic approach to this vast market sets us apart. Through meticulous study of player behavior and regulatory dynamics, we aim to emerge as a responsible and formidable operator in the budding U.S. market, extracting long-term value for Elys shareholders.”

Update on the Listing of Common Shares
On October 13, 2023, Elys Game Technology received written notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) informing the Company that trading of its common shares would be suspended as of the opening of business on October 17, 2023. As a result, Elys’ common shares began trading on the OTC markets in October, where they continue to trade today.

To prioritize the value for its shareholders, the Company will remain listed on the OTC Markets until further analysis of the exchange listing of our common shares is completed. Elys’ management team and board of directors are diligently assessing various major listing venues to determine the most strategic path forward, one that will ultimately offer the best opportunity to maximize shareholder value in the long term.

About Elys Game Technology, Corp.
Elys Game Technology, Corp. is a global gaming technology company operating in multiple countries worldwide. Elys offers its clients a full suite of omnichannel leisure gaming products and services, such as online sports betting, e-sports, virtual sports, online casino, poker, bingo, interactive games, and online slots on a B2C basis in Italy and has B2B operations in five states as well as the District of Columbia in the U.S. market. The Company provides sports betting software, online casino software, services for commercial and tribal casinos, retail betting establishments, and franchise distribution networks.

Elys’ vision is to become a global gaming industry leader by developing pioneering and innovative online casino software. Additional information is available on our corporate website at www.elysgame.com.

Investors may also find us on Twitter @ELYS5D; Instagram @elys5d; LinkedIn Elys America; YouTube @Elys5D; and on Facebook @Elys5D.

Forward-Looking Statements
This press release contains certain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are identified by the use of the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “continue,” “predict,” “potential,” “project,” and similar expressions that are intended to identify forward-looking statements and include statements regarding Elys. These forward-looking statements are based on management’s expectations and assumptions as of the date of this press release and are subject to a number of risks and uncertainties, many of which are difficult to predict that could cause actual results to differ materially from current expectations and assumptions from those set forth or implied by any forward-looking statements. Important factors that could cause actual results to differ materially from current expectations include, among others, the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and its subsequent filings with the U.S. Securities and Exchange Commission, including subsequent periodic reports on Form 10-Q and current reports on Form 8-K. The information in this release is provided only as of the date of this release. The Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events, except as required by law.

Investor Contact:
Tom Colton and Alec Wilson
Gateway Group, Inc.
949-574-3860
[email protected]

-Financial Tables to Follow-

ELYS GAME TECHNOLOGY, CORP.
Consolidated Balance Sheets
(Unaudited)

 

 

 

September 30,
2023

 

December 31,
2022

Current Assets

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,551,000

 

 

$

3,400,166

 

Accounts receivable

 

 

735,725

 

 

 

731,962

 

Gaming accounts receivable

 

 

1,841,921

 

 

 

1,431,497

 

Prepaid expenses

 

 

2,637,882

 

 

 

900,205

 

Related party receivable

 

 

22,511

 

 

 

22,511

 

Other current assets

 

 

379,781

 

 

 

338,871

 

Total Current Assets

 

 

8,168,820

 

 

 

6,825,212

 

 

 

 

 

 

 

 

 

 

Non – Current Assets

 

 

 

 

 

 

 

 

Restricted cash

 

 

 

 

 

364,701

 

Property and equipment

 

 

975,211

 

 

 

610,852

 

Right of use assets

 

 

1,471,190

 

 

 

1,498,703

 

Intangible assets

 

 

10,069,843

 

 

 

10,375,524

 

Goodwill

 

 

1,662,016

 

 

 

1,662,278

 

Marketable securities

 

 

 

 

 

19,999

 

Total Non – Current Assets

 

 

14,178,260

 

 

 

14,532,057

 

Total Assets

 

$

22,347,080

 

 

$

21,357,269

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

8,917,952

 

 

 

6,790,523

 

Gaming accounts payable

 

 

3,492,128

 

 

 

2,213,532

 

Taxes payable

 

 

61,187

 

 

 

179,720

 

Related party payable

 

 

46,916

 

 

 

422,129

 

Promissory notes payable – related parties

 

 

411,939

 

 

 

752,000

 

Operating lease liability

 

 

381,439

 

 

 

369,043

 

Financial lease liability

 

 

1,895

 

 

 

6,831

 

Bank loan payable – current portion

 

 

2,987

 

 

 

3,151

 

Total Current Liabilities

 

 

13,316,443

 

 

 

10,736,929

 

 

 

 

 

 

 

 

 

 

Non-Current Liabilities

 

 

 

 

 

 

 

 

Deferred tax liability

 

 

1,391,102

 

 

 

1,696,638

 

Operating lease liability

 

 

1,059,970

 

 

 

1,157,979

 

Financial lease liability

 

 

1,244

 

 

 

2,288

 

Bank loan payable

 

 

152,643

 

 

 

148,169

 

Convertible notes payable, net of discount of $169,003

 

 

209,347

 

 

 

 

Convertible notes payable – related parties, net of discount of $2,039,673

 

 

2,936,049

 

 

 

 

Other long-term liabilities

 

 

577,725

 

 

 

464,851

 

Total Non – Current Liabilities

 

 

6,328,080

 

 

 

3,469,925

 

Total Liabilities

 

 

19,644,523

 

 

 

14,206,854

 

 

 

 

 

 

 

 

 

 

Stockholders’ Equity

 

 

 

 

 

 

 

 

Common stock, $0.0001 par value, 80,000,000 shares authorized; 35,794,381 and 30,360,810 shares issued and outstanding as of September 30, 2023 and December 31, 2022

 

 

3,579

 

 

 

3,036

 

Additional paid-in capital

 

 

78,952,510

 

 

 

74,249,244

 

Accumulated other comprehensive loss

 

 

(609,554

)

 

 

(600,619

)

Accumulated deficit

 

 

(75,643,978

)

 

 

(66,501,246

)

Total Stockholders’ Equity

 

 

2,702,557

 

 

 

7,150,415

 

Total Liabilities and Stockholders’ Equity

 

$

22,347,080

 

 

$

21,357,269

 

 

ELYS GAME TECHNOLOGY, CORP.
Consolidated Statements of Changes in Stockholders’ Equity
Nine months ended September 30, 2023 and September 30, 2022
(Unaudited) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended
September 30,

 

For the Nine Months Ended
September 30,

 

 

2023

 

2022

 

2023

 

2022

Revenue

 

$

8,464,591

 

 

$

9,591,294

 

 

$

32,233,378

 

 

$

32,175,015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Costs and Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling expenses

 

 

6,724,275

 

 

 

6,874,581

 

 

 

26,158,349

 

 

 

24,029,532

 

General and administrative expenses

 

 

4,318,720

 

 

 

5,385,407

 

 

 

13,498,145

 

 

 

14,273,817

 

Depreciation and amortization

 

 

354,334

 

 

 

423,361

 

 

 

1,043,432

 

 

 

1,315,593

 

Restructuring and severance expenses

 

 

 

 

 

 

 

 

 

 

 

1,205,689

 

Total Costs and Expenses

 

 

11,397,329

 

 

 

12,683,349

 

 

 

40,699,926

 

 

 

40,824,631

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from Operations

 

 

(2,932,738

)

 

 

(3,092,055

)

 

 

(8,466,548

)

 

 

(8,649,616

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (Expenses) Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net of interest income

 

 

(162,474

)

 

 

(9,104

)

 

 

(273,701

)

 

 

(22,641

)

Amortization of debt discount

 

 

(142,381

)

 

 

 

 

 

(215,651

)

 

 

 

Other income

 

 

9,994

 

 

 

21,931

 

 

 

13,521

 

 

 

90,783

 

Changes in fair value of contingent purchase consideration

 

 

 

 

 

(482,059

)

 

 

 

 

 

(1,397,833

)

Other expense

 

 

 

 

 

(45,528

)

 

 

(7,017

)

 

 

(56,539

)

Gain (loss) on marketable securities

 

 

 

 

 

(49,250

)

 

 

(19,999

)

 

 

43,250

 

Total Other (Expenses) Income

 

 

(294,861

)

 

 

(564,010

)

 

 

(502,847

)

 

 

(1,342,980

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss Before Income Taxes

 

 

(3,227,599

)

 

 

(3,656,065

)

 

 

(8,969,395

)

 

 

(9,992,596

)

Income tax provision

 

 

4,240

 

 

 

(167,574

)

 

 

67,199

 

 

 

(200,518

)

Net Loss from continuing operations

 

 

(3,223,359

)

 

 

(3,823,639

)

 

 

(8,902,196

)

 

 

(10,193,114

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(34,690

)

 

 

 

 

 

(198,335

)

 

 

 

Loss on recission

 

 

(42,201

)

 

 

 

 

 

(42,201

)

 

 

 

Net loss from discontinued operations

 

 

(76,891

)

 

 

 

 

 

(240,536

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

$

(3,300,250

)

 

$

(3,823,639

)

 

$

(9,142,732

)

 

$

(10,193,114

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Comprehensive (Loss) Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign currency translation adjustment

 

 

(102,111

)

 

 

(367,765

)

 

 

(8,935

)

 

 

(877,996

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Loss

 

$

(3,402,361

)

 

$

(4,191,404

)

 

$

(9,151,667

)

 

$

(11,071,110

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per common share – basic and diluted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.10

)

 

$

(0.14

)

 

$

(0.27

)

 

$

(0.41

)

Discontinued operations

 

 

(0.00

)

 

 

0.00

 

 

 

(0.00

)

 

 

0.00

 

 

 

 

(0.10

)

 

 

(0.14

)

 

 

(0.27

)

 

 

(0.41

)

Weighted average number of common shares outstanding – basic and diluted

 

 

31,886,832

 

 

 

26,942,389

 

 

 

32,758,530

 

 

 

24,871,319

 

 ELYS GAME TECHNOLOGY, CORP.
Consolidated Statements of Cash Flows
(Unaudited)

 

 

 

 

 

 

 

For the nine months
ended September 30,

 

 

2023

 

2022

 

 

 

 

 

Net Loss

 

$

(9,142,732

)

 

$

(10,193,114

)

Net loss from discontinued operations

 

 

240,536

 

 

 

 

Net loss from continuing operations

 

 

(8,902,196

)

 

 

(10,193,114

)

Adjustments to reconcile net loss to net cash used in operating activities

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

1,043,431

 

 

 

1,315,593

 

Gain on disposal of property and equipment

 

 

(5,136

)

 

 

 

Amortization of debt discount

 

 

215,651

 

 

 

 

Restricted stock awards

 

 

685,688

 

 

 

2,012,600

 

Stock-based compensation expense

 

 

1,611,635

 

 

 

2,381,974

 

Non-cash interest

 

 

268,320

 

 

 

17,637

 

Loss on dissolution of subsidiary

 

 

325

 

 

 

 

Change in fair value of contingent purchase consideration

 

 

 

 

 

1,397,833

 

Unrealized loss (gain) on marketable securities

 

 

19,999

 

 

 

(43,250

)

Movement in deferred taxation

 

 

(124,437

)

 

 

(238,616

)

Changes in Operating Assets and Liabilities, net of assets acquired and liabilities assumed

 

 

 

 

 

 

 

 

Prepaid expenses

 

 

(1,757,254

)

 

 

(2,043,015

)

Accounts payable and accrued liabilities

 

 

1,307,024

 

 

 

(1,013,194

)

Accounts receivable

 

 

1,957

 

 

 

(282,002

)

Gaming accounts receivable

 

 

(440,090

)

 

 

981,478

 

Gaming accounts liabilities

 

 

1,339,804

 

 

 

693,455

 

Taxes payable

 

 

(122,333

)

 

 

391,339

 

Due from related parties

 

 

31,279

 

 

 

(8,026

)

Other current assets

 

 

(39,764

)

 

 

(19,838

)

Long term liability

 

 

122,022

 

 

 

76,916

 

Net Cash Used in Operating Activities – continuing operations

 

 

(4,744,075

)

 

 

(4,572,230

)

Net Cash Used in Operating Activities – discontinued operations

 

 

(76,697

)

 

 

 

NET CASH USED IN OPERATING ACTIVITIES

 

 

(4,820,772

)

 

 

(4,572,230

)

 

 

 

 

 

 

 

 

 

Cash Flows from Investing Activities

 

 

 

 

 

 

 

 

Acquisition of property and equipment and intangible assets

 

 

(1,112,830

)

 

 

(355,939

)

Net Cash Used in Investing Activities – continuing operations

 

 

(1,112,830

)

 

 

(355,939

)

Net Cash Provided by Investing Activities – discontinued operations

 

 

76,459

 

 

 

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

(1,036,371

)

 

 

(355,939

)

 

 

 

 

 

 

 

 

 

Cash Flows from Financing Activities

 

 

 

 

 

 

 

 

Proceeds from convertible notes

 

 

350,000

 

 

 

 

Proceeds from convertible notes, related parties

 

 

4,400,000

 

 

 

 

Proceeds from Subscriptions – Net of Fees

 

 

 

 

 

2,616,679

 

Proceeds from pre-funded warrants

 

 

 

 

 

512,813

 

Proceeds from related party promissory notes

 

 

 

 

 

665,000

 

Repayment of bank overdraft

 

 

 

 

 

(7,043

)

Repayment of bank loan

 

 

 

 

 

(33,041

)

Repayment of financial leases

 

 

(5,996

)

 

 

(5,926

)

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

 

4,744,004

 

 

 

3,748,482

 

 

 

 

 

 

 

 

 

 

Effect of change in exchange rate

 

 

(100,728

)

 

 

(1,504,030

)

 

 

 

 

 

 

 

 

 

Net decrease in cash

 

 

(1,213,867

)

 

 

(2,683,717

)

Cash, cash equivalents and restricted cash – beginning of the period

 

 

3,764,867

 

 

 

7,706,357

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH – END OF THE PERIOD

 

$

2,551,000

 

 

$

5,022,640

 

 

 

 

 

 

 

 

 

 

ELYS GAME TECHNOLOGY, CORP.

Consolidated Statements of Cash Flows
(Unaudited)

 

 

 

 

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash within the Balance Sheets to the Statement of Cash Flows

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,551,000

 

 

$

4,690,034

 

Restricted cash included in non-current assets

 

 

 

 

 

332,606

 

 

 

$

2,551,000

 

 

$

5,022,640

 

Supplemental disclosure of cash flow information

 

 

 

 

Cash paid during the period for:

 

 

 

 

Interest

 

$

5,735

 

 

$

5,855

 

Income tax

 

$

199,745

 

 

$

84,988

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow disclosure for non-cash activities

 

 

 

 

 

 

 

 

Fair value of common stock issued on acquisition of Engage IT Services Srl

 

$

1,735,615

 

 

$

 

Fair value of common stock returned on recission of acquisition of Engage IT Services Srl

 

$

(1,938,456

)

 

 

 

 

Fair value of warrant issued with convertible debt

 

$

2,424,327

 

 

$

 

Fair value of restricted stock issued to settle liabilities

 

$

60,000

 

 

$

 

Fair value of options issued to settle liabilities

 

$

125,000

 

 

$