Item 2.02. Results of Operations and Financial Condition.
On March 28, 2022, Elys Game Technology Corp. (the "Company") issued a press
release announcing certain expected financial results for its year ended
December 31, 2021. A copy of the press release is furnished as Exhibit 99.1 to
this Current Report.
The information in this Item 2.02 and in the press release attached as Exhibit
99.1 to this Current Report on Form 8-K shall not be deemed to be "filed" for
purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or
otherwise subject to the liabilities of that section or Sections 11 and 12(a)(2)
of the Securities Act of 1933, as amended. The information contained in this
Item 2.02 and in the press release attached as Exhibit 99.1 to this Current
Report on Form 8-K shall not be incorporated by reference into any filing with
the U.S. Securities and Exchange Commission made by the Company, whether made
before or after the date hereof, regardless of any general incorporation
language in such filing.
Item 8.01. Other Events.
On March 28, 2022, the Company issued a press release in which it stated, among
other things, that the Company's management expects revenues to increase by
approximately 22% to approximately $45.5 million, subject to final audit
verification, for the fiscal year ended December 31, 2021 compared to
approximately $37.3 million for the fiscal year ended December 31, 2020.
Additionally, the Company expects web-based gross gaming revenue to increase by
approximately 74% to approximately $54.9 million for the fiscal year ended
December 31, 2021, subject to final audit verification, compared to
approximately $31.6 million for the fiscal year ended December 31, 2020.
The Company also provided certain estimates regarding operating expenses, before
impairment charges, which includes selling and general and administrative
expenses that are anticipated to be as follows:
· Selling expenses, which consists primarily of commissions paid to third party
agents on the Company's B2C operations in Europe and calculated as a percentage
of turnover, of approximately $36.3 million increased by approximately 39% for
the fiscal year ended December 31, 2021 compared to approximately $26.1 million
in the prior year on the back of an increase in turnover of approximately 47%,
all of which is subject to final audit verification.
· General and administrative expenses have increased by approximately $5.3
million or 39% from approximately $13.8 million in 2020 to approximately $19.1
million in 2021, subject to final audit verification. The increase is a direct
result of the Company's entry into the U.S. market, including increased
expenses related to the acquisition and operation of Bookmakers Company US, LLC
and significant expenses incurred in both personnel costs and professional fees
to develop and establish a foothold in the U.S. market.
Impairment charges, which are non-cash, are preliminarily estimated to be $16
million for 2021, subject to final audit verification. These preliminary
impairment costs are estimated to include (i) an impairment of a European
license of $4.8 million, as management is concentrating its efforts on the U.S.
and Canadian markets with their future growth potential compared to the measured
growth potential in more mature European markets; and (ii) an impairment of
goodwill related to our recent U.S. acquisition preliminarily estimated to be
$11.2 million, which is offset by a reduction in future earnout payments
estimated at $12.3 million, based on the timing of the anticipated revenue
growth in our recently acquired subsidiary, Bookmakers Company US, LLC.
The Company is in the process of finalizing its results for the fiscal year
ended December 31, 2021 and the information provided in this Item 8.01 is based
on currently available information, all of which is subject to final audit
verification. The preliminary, estimated financial results for the fiscal year
2021 contained in this Current Report on Form 8-K contain forward-looking
statements and are subject to the completion of management's and the audit
committee's final reviews and our other financial closing procedures and are
therefore subject to change. You should not place undue reliance on such
preliminary information and estimates because they may prove to be materially
inaccurate. The preliminary information and estimates have not been compiled or
examined by our independent auditors and they are subject to revision as we
prepare our financial statements as of and for the fiscal year ended December
31, 2021, including all disclosures required by U.S. generally accepted
accounting principles, and as our auditors conduct their audit of these
financial statements. While we believe that such preliminary information and
estimates are based on reasonable assumptions, actual results may vary, and such
variations may be material.
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
the estimated increase in revenues, the estimated increase in web-based gross
gaming revenue, the estimated increase in percentage of turnover, the estimated
increase in general and administrative expenses, the Company continuing to incur
expenses related to its expansion investment in the U.S. market, winning further
margin improvement in Multigioco B2C operations as the Company grows its
omni-channel distribution approach, rolling out the land-based channel of the
Company's powerful Elys Gameboard technology in Europe on a B2B basis,
establishing ourselves as one of the world's leading end-to-end sports betting
enterprises, aligning its product and service offerings to the needs of its B2B
clients as well as B2C consumers in order to build a well-managed organization
that is both highly profitable and sustainable, converting investment in
technology into revenue generating customer relationships in the U.S. and
Canada, challenging for top position in North America by combining our
leading-edge U.S. designed sportsbook technology with industry giant
Lottomatica, anticipate meaningful near-term milestones and providing updates on
these developments as they unfold. 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 Company's
ability to successfully launch its operations in the U.S., the regulatory
environment in all jurisdictions in which we operate, the ability to grow market
share in new and existing markets, the Company's ability to quickly adapt to
market conditions such as the current pandemic, the Company's ability to win
further margin improvement in Multigioco B2C operations as we grow our
omni-channel distribution approach as expected, roll-out the land-based channel
of our powerful Elys Gameboard technology in Europe on a B2B basis as planned,
establish ourselves as one of the world's leading end-to-end sports betting
enterprises, aligning our product and service offerings to the needs of our B2B
clients as well as B2C consumers in order to build a well-managed organization
that is both highly profitable and sustainable, convert our investment in
technology into revenue generating customer relationships in the U.S. and Canada
as planned, challenge for top position in North America by combining our
leading-edge U.S. designed sportsbook technology with industry giant Lottomatica
as expected, the duration and scope of the COVID-19 outbreak worldwide,
including the impact to the state and local economies, and the risk factors
described in the Company's Annual Report on Form 10-K for the year ended
December 31, 2020 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, and 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.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Exhibit
Number Exhibit Description
99.1 Press Release issued by Elys Game Technology, Corp. on March 28, 2022
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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