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, 2024

☐	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 14, 2024, there were 36,615,932 shares of the registrant’s $0.00001 par value common stock issued and outstanding.

GOLDEN MATRIX GROUP, INC.

TABLE OF CONTENTS

		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	35
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	50

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
Item 3.	Defaults Upon Senior Securities	53
Item 4.	Mine Safety Disclosures	53
Item 5.	Other Information	53
Item 6.	Exhibits	54

Table of Contents

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:

	·	our need for significant additional financing to grow and expand our operations and complete acquisitions, including the Purchase of the Meridian Companies, discussed and defined below under “NOTE 16 – MERIDIAN PURCHASE AGREEMENT” to the unaudited financial statements included under “Part I – Financial Statements – “Item 1. Financial Statements” (the “Meridian Acquisition”), defined below, 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;

	·	dilution caused by the conversion of outstanding preferred stock, and/or acquisitions;

	·	the Company’s ability to complete acquisitions, including the pending acquisition of the Meridian Companies (as defined below), and the available funding for such acquisitions; and disruptions caused by acquisitions, including the pending Meridian Acquisition, changes of control in connection with the Meridian Acquisition and other risks associated therewith;

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

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

	·	the Company’s ability to maintain the listing of its common stock on the Nasdaq Capital Market;

	·	the ability of the Company to manage growth;

	·	the Company’s expectations for future growth, revenues, and profitability;

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

Table of Contents

	·	the Company’s reliance on its management;

	·	the fact that the Company’s Chief Executive Officer has voting control over the Company and that the sellers in the Meridian Acquisition will have voting control over the Company following the acquisition;

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

	·	the potential effect of economic downturns, recessions, changes 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;

	·	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.

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Golden Matrix Group, Inc. and Subsidiary
Consolidated Balance Sheets
	January 31, 2024			October 31, 2023
ASSETS

Current assets:
Cash	$	17,292,978		$	17,100,280
Accounts receivable, net		4,031,349			3,551,383
Accounts receivable – related parties		296,472			331,246
Prepaid expenses		142,992			103,271
Short-term deposit		53,838			51,971
Inventory, prizes		2,376,836			1,714,525
Total current assets	$	24,194,465		$	22,852,676

Non-current assets:
Property, plant & equipment, net		40,139			46,447
Intangible assets, net		2,145,137			2,245,341
Operating lease right-of-use assets		335,702			56,643
Goodwill		10,381,710			10,381,710
Total non-current assets		12,902,688			12,730,141
Total assets	$	37,097,153		$	35,582,817

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	2,865,859		$	2,847,653
Accounts payable – related parties		3,627			12,921
Accrued income tax liability		664,444			476,485
Deferred revenues		130,560			108,106
Deferred tax liability		19,748			18,819
Current portion of operating lease liability		81,086			59,089
Customer deposits		291,238			348,620
Accrued interest		123			123
Contingent liability		636,650			607,607
Total current liabilities		4,693,335			4,479,423

Non-current liabilities:
Non-current portion of operating lease liability		257,077			-
Total non-current liabilities		257,077			-
Total liabilities	$	4,950,412		$	4,479,423

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 shares authorized; 36,615,932 and 36,162,932 shares issued and outstanding, respectively	$	366		$	362
Additional paid-in capital		57,794,735			57,023,788
Accumulated other comprehensive income (loss)		124,732			(73,159	)
Accumulated deficit		(25,773,092	)		(25,847,597	)
Total shareholders’ equity of GMGI		32,146,741			31,103,394
Total liabilities and shareholders’ equity	$	37,097,153		$	35,582,817

See accompanying notes to consolidated financial statements.

Table of Contents

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

	Three Months Ended
	January 31,
	2024			2023

Revenues	$	11,778,656		$	10,591,036
Revenues-related party		65,226			186,643
Total revenues		11,843,882			10,777,679
Cost of goods sold		(8,468,622	)		(8,334,645	)
Gross profit		3,375,260			2,443,034

Costs and expenses:
General and administrative expense		2,336,792			2,037,295
General and administrative expense- related party		759,264			734,694
Total operating expenses		3,096,056			2,771,989
Gain (Loss) from operations		279,204			(328,955	)

Other income (expense):
Interest expense		(600	)		(998	)
Interest earned		39,264			11,905
Foreign exchange gain		18,817			20,213
Total other income (expense)		57,481			31,120
Net income (loss) before tax		336,685			(297,835	)
Provision for income taxes		262,180			145,686
Net income (loss)		74,505			(443,521	)

Weighted average ordinary shares outstanding:
Basic		36,276,139			33,311,667
Diluted		38,779,778			33,311,667
Net income (loss) per ordinary share attributable to GMGI:
Basic	$	0.00		$	(0.01	)
Diluted	$	0.00		$	(0.01	)

Statements of Comprehensive Income:
Net income (loss)	$	74,505		$	(443,521	)
Foreign currency translation adjustments		197,891			152,259
Comprehensive income (loss)	$	272,396		$	(291,262	)

See accompanying notes to consolidated financial statements.

Table of Contents

Golden Matrix Group, Inc. and Subsidiaries

Consolidated Statement of Shareholders’ Equity

(Unaudited)

Three Months Ended January 31, 2023

	Preferred Stock- Series B				Common Stock				Additional Paid-in			Unearned			Accumulated Other Comprehensive			Accumulated			Total Equity of			Non- controlling			Total Stockholder’s
	Shares		Amount		Shares		Amount		Capital			Compensation			Income (Loss)			Deficit			GMGI			interest			Equity
Balance at October 31, 2022		1,000	$	-		28,182,575	$	282	$	51,677,727		$	-		$	(205,747	)	$	(24,674,847	)	$	26,797,415		$	2,999,066		$	29,796,481
Shares issued as consideration to acquire RKings		-		-		165,444		2		2,928,450			-			-			-			2,928,452			(2,928,452	)		-
Shares issued on cashless exercise of options		-		-		7,122,230		71		(71	)		-			-			-			-			-			-
Shares issued for services		-		-		104,277		1		265,999			(2,611	)		-			-			263,389			-			263,389
Shares issued for vested RSUs		-		-		525,000		5		(5	)		-			-			-			-			-			-
FV of stock-based compensation		-		-		-		-		818,395			-			-			-			818,395			-			818,395
Cumulative translation adjustment		-		-		-		-		-			-			152,259			-			152,259			-			152,259
Adjustment to reduce NCI amount recorded for RKings acquisition		-		-		-		-		-			-			-			-			-			(70,614	)		(70,614	)
Net loss for the quarter		-		-		-		-		-			-			-			(443,521	)		(443,521	)		-			(443,521	)
Balance at January 31, 2023		1,000	$	-		36,099,526	$	361	$	55,690,495		$	(2,611	)	$	(53,

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