Golden Matrix Group Inc. Announces Additional Amendment to Earnout Structure of Share Purchase Agreement With Subsidiary Meridianbet

Rhea-AI Summary

Golden Matrix Group Inc. (NASDAQ: GMGI) has announced its fifth amendment to the share purchase agreement with Meridianbet, modifying the earnout structure for the previous acquisition. The amendment, effective October 1, 2024, alters the payment terms for the three sellers: Aleksandar Milovanović, Zoran Milošević, and Snežana Božović.

Key changes include:

• Partial conversion of cash payments to GMGI common stock
• Deferred payment schedules for remaining cash considerations
• Milovanović: 40% in stock, remaining cash deferred to November 9, 2024
• Milošević: 40% in stock, remaining cash paid $50,000 monthly from October to December 2024
• Božović: 20% in stock, remaining cash paid $50,000 monthly in October and November 2024

This amendment aims to align stakeholder interests with GMGI's long-term growth and provide the company with enhanced financial flexibility for strategic initiatives and expansion efforts.

Positive

• Partial conversion of cash payments to company stock aligns seller interests with GMGI's long-term growth
• Deferred payment schedules for remaining cash considerations improve short-term cash flow
• Enhanced financial flexibility for GMGI to focus on strategic initiatives and expansion efforts

Negative

• Potential dilution of existing shareholders due to issuance of new common stock
• Ongoing financial obligations related to the Meridianbet acquisition

Insights

Financial Analyst

This amendment to the earnout structure of Golden Matrix Group's acquisition of Meridianbet is a strategic financial move. By converting a portion of the cash payments to stock, GMGI is preserving cash flow in the short term. This could be seen as a positive sign, indicating the company's confidence in its future stock performance. The deferred payment schedule for the remaining cash portions also provides GMGI with improved liquidity management.

The conversion rates vary among the sellers, with Milovanović and Milošević receiving 40% in stock, while Božović receives 20%. This differentiated approach suggests tailored negotiations and possibly reflects the sellers' individual roles or contributions to the acquired business.

From an investor's perspective, this amendment has both positive and negative implications. On the positive side, it aligns the sellers' interests more closely with GMGI's future performance and reduces immediate cash outflow. However, it also means potential dilution for existing shareholders. The market's reaction will depend on how investors weigh these factors against GMGI's growth prospects and the perceived value of retaining key personnel from the acquisition.

Legal Expert

This amendment to the Share Purchase Agreement demonstrates the flexibility often built into complex M&A transactions. It's a common practice to adjust earnout structures post-acquisition, especially when market conditions or company performance may have shifted since the original agreement.

The legal implications here are significant:

• By converting cash obligations to stock, GMGI is effectively changing the nature of the consideration, which requires careful structuring to ensure compliance with securities laws.
• The deferred payment schedules create new contractual obligations that must be carefully documented and adhered to.
• The differentiated treatment of sellers (40% stock conversion for two, 20% for one) must be justified to avoid potential claims of unfair treatment.

From a governance perspective, this amendment likely required board approval and should be disclosed in GMGI's next SEC filing. Investors should monitor for any further amendments, as multiple changes could signal ongoing negotiations or challenges in integrating the acquisition.

LAS VEGAS, Oct. 02, 2024 (GLOBE NEWSWIRE) -- Golden Matrix Group Inc. (NASDAQ: GMGI) (“GMGI” or “the Company”) announces that on 1st October 2024, the Company passed its fifth amendment to the initial share purchase agreement (the “Share Purchase Agreement”) with Meridianbet in connection with the Company’s previous acquisition of Meridianbet earlier this year.

Under the current Purchase Agreement, Golden Matrix is obligated to pay Aleksandar Milovanović, Zoran Milošević and Snežana Božović (the “Sellers”) additional sums of cash and Golden Matrix Common Stock within five business days following October 9, 2024.

As of 1st October 1, 2024, the Share Purchase Agreement was amended to reflect that the cash component shall be paid to each of the Sellers as follows:

• Milovanović – 40% of the total post-closing cash consideration due to Milovanović shall be satisfied in shares of Golden Matrix Common Stock and the remaining contingent post-closing cash consideration shall be deferred until at least November 9, 2024.
• Milošević – 40% of the total post-closing cash consideration due to Milosevic shall be satisfied in shares of Golden Matrix Common Stock and the remaining contingent post-closing cash consideration shall be payable at the rate of USD$50,000 per month, on each of October 1, 2024, November 1, 2024 and December 1, 2024.
• Božović – 20% of the total of the post-closing cash consideration due to Božović shall be satisfied in shares of Golden Matrix Common Stock and the remaining contingent post-closing cash consideration shall be payable at the rate of USD$50,000 per month, on each of October 1, 2024 and November 1, 2024.

These conversions from contingent cash payments to Golden Matrix Common Stock aligns the interests of key stakeholders with GMGI’s long-term prospects for further growth and overall continued success. Moreover, it is expected to provide GMGI with enhanced financial flexibility as it continues to focus on its various strategic initiatives and expansion efforts.

About Golden Matrix Group

Golden Matrix Group, based in Las Vegas, NV, is a leading B2B and B2C gaming technology company utilizing proprietary technology and operating globally across multiple international markets. The B2B division of Golden Matrix develops and licenses branded gaming platforms for its extensive list of clients, and RKings, its B2C division, operates a high-volume eCommerce site enabling end users to enter paid-for competitions on its proprietary platform in authorized markets.

About Meridianbet

Founded in 2001 and acquired by Golden Matrix in April 2024, Meridianbet Group is a well-established online sports betting and gaming group, licensed and/or currently operating in 17 jurisdictions across Europe, Africa, and South America. Meridianbet’s successful business model utilizes proprietary technology and scalable systems, thus allowing it to operate in multiple countries and currencies and with an omni-channel approach to markets, including retail, desktop online, and mobile.

Forward-Looking Statements

Certain statements made in this press release contain forward-looking information within the meaning of applicable securities laws, including within the meaning of the Private Securities Litigation Reform Act of 1995 (“forward-looking statements”). Words such as “strategy,” “expects,” “continues,” “plans,” “anticipates,” “believes,” “would,” “will,” “estimates,” “intends,” “projects,” “goals,” “targets” and other words of similar meaning are intended to identify forward-looking statements but are not the exclusive means of identifying these statements.

Important factors that may cause actual results and outcomes to differ materially from those contained in such forward-looking statements include, without limitation, the ability of the Company to obtain the funding required to pay certain Meridianbet Group acquisition post-closing obligations, the terms of such funding, potential dilution caused thereby and/or covenants agreed to in connection therewith; potential lawsuits regarding the acquisition; dilution caused by the terms of the Note and Warrant, the Company’s ability to pay amounts due under the Note and covenants associated therewith and penalties which could be due under the Note and securities purchase agreement for failure to comply with the terms thereof; the business, economic and political conditions in the markets in which the Company operates; the effect on the Company and its operations of the ongoing Ukraine/Russia conflict and the conflict in Israel, changing interest rates and inflation, and risks of recessions; the need for additional financing, the terms of such financing and the availability of such financing; the ability of the Company and/or its subsidiaries to obtain additional gaming licenses; the ability of the Company to manage growth; the Company’s ability to complete acquisitions and the availability of funding for such acquisitions; disruptions caused by acquisitions; dilution caused by fund raising, the conversion of outstanding preferred stock, convertible securities and/or acquisitions; the Company’s ability to maintain the listing of its common stock on the Nasdaq Capital Market; the Company’s expectations for future growth, revenues, and profitability; the Company’s expectations regarding future plans and timing thereof; the Company’s reliance on its management; the fact that the sellers of the Meridianbet Group hold voting control over the Company; related party relationships; the potential effect of economic downturns, recessions, increases in interest rates and inflation, and market conditions, decreases in discretionary spending and therefore demand for our products and services, and increases in the cost of capital, related thereto, among other affects thereof, on the Company’s operations and prospects; the Company’s ability to protect proprietary information; the ability of the Company to compete in its market; the effect of current and future regulation, the Company’s ability to comply with regulations and potential penalties in the event it fails to comply with such regulations and changes in the enforcement and interpretation of existing laws and regulations and the adoption of new laws and regulations that may unfavorably impact our business; the risks associated with gaming fraud, user cheating and cyber-attacks; risks associated with systems failures and failures of technology and infrastructure on which the Company’s programs rely; foreign exchange and currency risks; the outcome of contingencies, including legal proceedings in the normal course of business; the ability to compete against existing and new competitors; the ability to manage expenses associated with sales and marketing and necessary general and administrative and technology investments; and general consumer sentiment and economic conditions that may affect levels of discretionary customer purchases of the Company’s products, including potential recessions and global economic slowdowns. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this press release are reasonable, we provide no assurance that these plans, intentions or expectations will be achieved.

Other important factors that may cause actual results and outcomes to differ materially from those contained in the forward-looking statements included in this communication are described in the Company’s publicly-filed reports, including, but not limited to, under the “Special Note Regarding Forward-Looking Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s periodic and current filings with the SEC, including the Form 10-Qs and Form 10-Ks, including, but not limited to, the Company’s Annual Report on Form 10-K for the year ended October 31, 2023 and its Quarterly Report on Form 10-Q for the quarter ended January 31, 2024, and future periodic reports on Form 10-K and Form 10 Q. These reports are available at www.sec.gov.

ICR:
Brett Milotte
brett.milotte@icrinc.com

Attachment

• Golden Matrix Group Inc,

FAQ

What changes were made to the Meridianbet earnout structure by Golden Matrix Group (GMGI)?

GMGI amended the share purchase agreement on October 1, 2024, converting portions of cash payments to GMGI common stock and deferring remaining cash payments for the three sellers: Aleksandar Milovanović, Zoran Milošević, and Snežana Božović.

How does the amendment affect GMGI's financial obligations for the Meridianbet acquisition?

The amendment provides GMGI with enhanced financial flexibility by partially converting cash payments to stock and deferring remaining cash considerations, allowing the company to better manage its short-term cash flow while focusing on strategic initiatives.

What percentage of the earnout payments will be converted to GMGI stock for each seller?

Milovanović and Milošević will have 40% of their post-closing cash consideration converted to GMGI common stock, while Božović will have 20% converted.

When are the remaining cash payments scheduled for the Meridianbet sellers under the new amendment?

Milovanović's remaining cash is deferred until at least November 9, 2024. Milošević will receive $50,000 monthly from October to December 2024. Božović will receive $50,000 monthly in October and November 2024.