Esports Entertainment Group agrees to complete $4.3 million private placement

(PRESS RELEASE) -- Esports Entertainment Group, Inc., a leading, global iGaming company and business-to-business esports content and solutions provider, today announced that it has entered into a securities purchase agreement to complete a private placement of new unsecured, Series D Convertible Preferred Stock with an institutional investor, which is expected to provide the Company with net proceeds of approximately $4.0 million after estimated offering expenses. The private placement may also provide the company with an opportunity for additional funding whereby the Iinvestor would receive a warrant to purchase shares of common stock and a warrant to purchase additional shares of Series D Convertible Preferred Stock. The closing of the offering is expected to occur during the first week of May 2023, subject to customary and other closing conditions.

The Company previously announced that it had entered into an agreement with Alto Opportunity Master Fund, SPC – Segregated Master Portfolio B to exchange the $15,230,024 in aggregate principal amount of the Company’s Senior Convertible Note outstanding into 15,230 shares of the new unsecured Series C Convertible Preferred Stock (the “Exchange Transaction”). This exchange transaction was consummated on April 28, 2023, which will result in a significant reduction of its indebtedness.

The Company also reported that it now has stockholders’ equity in excess of the Nasdaq Stock Market’s minimum stockholders’ equity requirement of $2,500,000 as set forth in Nasdaq listing rule 5550(b)(1) as a result of recent actions, including the aforementioned private placement and exchange of the Senior Convertible Note into unsecured Series C Convertible Preferred Stock, as well as the elimination of other debt and liabilities.

Alex Igelman, CEO of Esports Entertainment, stated, “We appreciate the additional investment in the Company, which not only bolsters our cash position but also complements the previously announced exchange of the Company’s $15 million Senior Convertible Note into unsecured, Series C Convertible Preferred Stock. As a result of these transactions, we expect to have significantly enhanced our balance sheet. Moreover, we have eliminated over $4.0 million of annual operating expenses and project that we will have reduced debt and other liabilities by over $42 million, year to date. As a result, we are now positioning the Company to execute on our new, highly focused and capital efficient business model, targeting the growing iGaming, esports and e-simulator markets.”

Certain issuances of shares of common stock upon conversion of the Series D Convertible Preferred Stock and common warrant are expected to require approval by the Company’s stockholders pursuant to the rules and regulations of the Nasdaq Stock Market. In addition, the Company expects to grant the Investor certain registration rights with respect to shares of common stock it is issued upon conversion of shares of Series D Convertible Preferred Stock and exercise of the warrant to purchase common stock.

Maxim Group LLC is acting as the sole placement agent in connection with the offering.