gmgi_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2023

☐	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934

For the transition period from ______ to _______

Commission File Number 001-41326

Golden Matrix Group, Inc.

(Exact name of registrant as specified in its charter)

Nevada

46-1814729

(State or other jurisdiction

of incorporation or organization)

(I.R.S. Employer

Identification No.)

3651 Lindell Road, Ste D131

Las Vegas, NV

89103

(Address of principal executive offices)

(Zip Code)

(702) 318-7548

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.00001 Par Value Per Share

GMGI

The NASDAQ Stock Market LLC

(The NASDAQ Capital Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated Filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised accounting standard provided pursuant to Section 13(a) of the Exchanger Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of March 16, 2023, there were 36,099,526 shares of the registrant’s $0.00001 par value common stock issued and outstanding.

GOLDEN MATRIX GROUP, INC.

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		Page
Special Note Regarding Forward-Looking Statements		3

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 4.	Controls and Procedures	52

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	54
Item 1A.	Risk Factors	54
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 3.	Defaults Upon Senior Securities	54
Item 4.	Mine Safety Disclosures	55
Item 5.	Other Information	55
Item 6.	Exhibits	55

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Information included in this Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”) and the Private Securities Litigation Reform Act of 1995. This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Golden Matrix Group, Inc. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future. You should read the matters described and incorporated by reference in “Risk Factors” and the other cautionary statements made in this Report, and incorporated by reference herein, as being applicable to all related forward-looking statements wherever they appear in this Report. We cannot assure you that the forward-looking statements in this Report will prove to be accurate and therefore prospective investors are encouraged not to place undue reliance on forward-looking statements.

Summary Risk Factors

Our business is subject to numerous risks and uncertainties, including those included in, and incorporated by reference in, the section entitled “Risk Factors” and elsewhere in this Report. These risks include, but are not limited to, the following:

	·	the impact of the COVID-19 pandemic on the Company;

	·	our need for significant additional financing to grow and expand our operations, the availability and the terms of such financing, and potential dilution which may be caused by the availability of such financing, if obtained through the sale of equity or convertible securities;

	·	the impact of the COVID-19 pandemic, and other pandemics and epidemics, on the Company to manage growth;

	·	the ability of the Company to obtain additional gaming licenses;

	·	our limited operating history;

	·	the Company’s ability to complete acquisitions and the available funding for such acquisitions; and disruptions caused by acquisitions;

	·	the reliance on suppliers of third-party gaming content and the cost of such content;

	·	dilution caused by fund raising, the conversion of outstanding preferred stock, 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;

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	·	the Company’s expectations regarding future plans and timing thereof;

	·	the Company’s reliance on its management;

	·	the fact that the Company’s Chief Executive Officer has voting control over the Company;

	·	related party relationships as well as conflicts of interest related thereto;

	·	the potential effect of economic downturns, recessions, increases in interest rates and inflation, and market conditions, including recessions, decreases in discretionary spending and therefore demand for our products, and increases in the cost of capital, related thereto, among other affects thereof, on the Company’s operations and prospects as a result of increased inflation, increasing interest rates, global conflicts and other events;

	·	the Company’s ability to protect proprietary information;

	·	the ability of the Company to compete in its market;

	·	dilution caused by efforts to obtain additional financing;

	·	the effect of current and future regulation, the Company’s ability to comply with regulations (both current and future) 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, as well as cybersecurity and hacking risks;

	·	risks relating to inventory management;

	·	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.

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PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Golden Matrix Group, Inc. and Subsidiaries
Consolidated Balance Sheets

	As of			As of
	January 31, 2023			October 31, 2022
	(Unaudited)			(Audited)
ASSETS

Current assets:
Cash and cash equivalents	$	15,423,897		$	14,949,673
Accounts receivable, net		3,489,673			2,641,023
Accounts receivable – related parties		355,356			413,714
Prepaid expenses		274,688			84,372
Short-term deposit		57,630			52,577
Inventory, prizes		1,612,975			1,147,591
Total current assets	$	21,214,219		$	19,288,950

Non-current assets:
Property, plant & equipment, net		78,484			72,411
Intangible assets, net		2,568,519			2,607,075
Operating lease right-of-use assets		140,153			150,653
Goodwill		10,381,710			10,452,324
Total non-current assets		13,168,866			13,282,463
Total assets	$	34,383,085		$	32,571,413

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	2,098,290		$	1,385,076
Accounts payable – related parties		28,941			10,637
Accrued income tax liability		495,308			324,147
Deferred revenues		137,889			182,444
Deferred tax liability		4,712			4,409
Current portion of operating lease liability		107,050			95,085
Customer deposits		310,103			109,328
Accrued interest		123			123
Contingent liability		615,839			573,197
Consideration payable		30,708			-
Consideration payable – related party		-			30,708
Total current liabilities		3,828,963			2,715,154

Non-current liabilities:
Non-current portion of operating lease liability		37,733			59,778
Total non-current liabilities		37,733			59,778
Total liabilities	$	3,866,696		$	2,774,932

Shareholders’ equity:
Preferred stock: $0.00001 par value; 20,000,000 shares authorized		-			-
Preferred stock, Series B: $0.00001 par value, 1,000 shares designated, 1,000 and 1,000 shares issued and outstanding, respectively		-			-
Common stock: $0.00001 par value; 250,000,000 and 40,000,000 shares authorized; 36,099,526 and 28,182,575 shares issued and outstanding, respectively	$	361			282
Additional paid-in capital		55,690,495			51,677,727
Unearned compensation		(2,611	)		-
Accumulated other comprehensive loss		(53,488	)		(205,747	)
Accumulated deficit		(25,118,368	)		(24,674,847	)
Total shareholders’ equity of GMGI		30,516,389			26,797,415
Noncontrolling interests		-			2,999,066
Total equity		30,516,389			29,796,481
Total liabilities and shareholders’ equity	$	34,383,085		$	32,571,413

See accompanying notes to consolidated financial statements.

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Golden Matrix Group, Inc. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)

	Three Months Ended
	January 31,
	2023			2022

Revenues	$	10,591,036		$	8,641,859
Revenues-related party		186,643			235,246
Total revenues		10,777,679			8,877,105
Cost of goods sold		(8,334,645	)		(6,853,002	)
Gross profit		2,443,034			2,024,103

Costs and expenses:
General and administrative expense		2,037,295			1,464,545
General and administrative expense- related party		734,694			155,600
Total operating expenses		2,771,989			1,620,145
Gain (Loss) from operations		(328,955	)		403,958

Other income (expense):
Interest expense		(998	)		-
Interest earned		11,905			441
Foreign exchange gain		20,213			84,676
Total other income (expense)		31,120			85,117
Net income (loss) before tax		(297,835	)		489,075
Provision for income taxes		145,686			75,404
Net income (loss)		(443,521	)		413,671
Less: Net income attributable to noncontrolling interest		-			64,292
Net income (loss) attributable to GMGI	$	(443,521	)	$	349,379

Weighted average ordinary shares outstanding:
Basic		33,311,667			27,747,956
Diluted		33,311,667			35,758,682
Net income (loss) per ordinary share attributable to GMGI:
Basic	$	(0.01	)	$	0.01
Diluted	$	(0.01	)	$	0.01

Statements of Comprehensive Income:
Net income (loss)	$	(443,521	)	$	413,671
Foreign currency translation adjustments		152,259			57,054
Comprehensive income (loss)		(291,262	)		470,725
Less: Net income attributable to noncontrolling interest		-			64,292
Comprehensive income (loss) attributable to GMGI	$	(291,262	)	$	406,433

See accompanying notes to consolidated financial statements.

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Golden Matrix Group, Inc. and Subsidiaries

Consolidated Statement of Shareholders’ Equity

(Unaudited)

Three Months Ended January 31, 2022

	Preferred Stock-Series B				Common Stock				Additional Paid-in			Accumulated Other Comprehensive			Accumulated			Total Equity		Non-controlling		Total Stockholder’s
	Shares		Amount		Shares		Amount		Capital			Income (Loss)			Deficit			of GMGI		interest		Equity
Balance at October 31, 2021		1,000	$	-		27,231,401	$	272	$	43,354,366		$	(1,720	)	$	(24,424,809	)	$	18,928,109	$	-	$	18,928,109

Shares issued for services		-		-		808		-		6,000			-			-			6,000		-		6,000
Shares issued on cashless exercise of options		-		-		112,095		1		(1	)		-			-			-		-		-
Shares issued on cashless exercise of options – related party		-		-		35,023

SEC Form 10-Q filed by Golden Matrix Group Inc.