EBET, INC.

Greetings. Welcome to Esports Technology's first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. During the course of this call, statements made that are not statements of historical fact constitute forward-looking statements that are subject to risks, uncertainties, and other factors that could cause our actual results to differ materially from those contemplated in these forward-looking statements. Forward-looking statements are based on management's current assumptions, expectations of future events and trends, which may affect esports technology's business, strategy, operations, or financial performance. Existing and prospective investors are questioned not to place undue reliance on these forward-looking statements, which speak only as of today's date. For more information, please refer to the risks and uncertainties and other factors discussed in eSports Technologies SEC filings, particularly its Form 10-K for the year ended September 30, 2021. All cautionary statements that we make during this call are applicable to any forward-looking statements that we make whenever they appear. You should carefully consider the risk uncertainties and other factors discussed in eSports Technologies SEC filings. eSports Technologies undertakes no obligation to update any estimate, projection, or forward-looking statements. Please note that this conference is being recorded. I will now turn the conference over to Aaron Speech, founder and CEO. Thank you. You may begin.

Good morning, everyone, and welcome. We are very pleased with what we have accomplished during our first quarter of 2022, as we have taken significant strides in achieving our goal of being the leader in esports wagering and technology. Our vision is to provide unique wagering experiences to the 550 million underserved esports fans from around the world. During Q1 2022, we took significant strides towards our vision. We completed a transformative acquisition of five online casino and sportsbook brands with 1.25 million deposited customers, with a majority of them under the age of 35. Of the top 15 wagering markets, Europe has 12. With this acquisition, we now have market access to many of these European markets. Access to tier one regulated markets, including the United Kingdom, Germany, Ireland, and Denmark. Our future esports products will have audience of over 200 million people in the European markets. Our acquisition integration is going better than anticipated. The performance of the assets are on target and our key acquisition integration goals are going extremely well. We have consolidated all of our products onto a single platform. This will allow us to be efficient as we launch GoGawi into Asia, Latin America, and CIS countries. Key post-acquisition targets, including employee migration, are being hit and or exceeded. We are diversifying our revenue by expanding into Latin America and Asia, along with the European businesses that we just acquired. We are on track to launch our eSports products in calendar 2022, including eSports Book, which will be our regulated sports betting product with a focus on eSports throughout Europe and other regulated markets that we have access to, and BrowserBet, which is our unique browser extension that will allow a consumer to bet directly in the video stream that they are watching. We're excited that both of those products are on track for Q2 of this calendar year. We continue to make progress to patent our technologies and innovations. We've submitted five patent applications in the US over the last 12 months. While these are all pending review, It is a key that we obtain patent approval on our technology innovations. We recently just opened our offices in Malta and are happy to say that all of the employees from the acquired brand are successfully moved in. We drove $7.1 million in revenue, with most of that coming in December from the newly acquired brands, and increased cash position to $11.8 million, up $2.8 million from year end. We were very excited to release a 10-month projected earning of $70 million for fiscal year ending September 30th. And with that, I'll hand it over to Jim.

Thank you, Aaron, and good morning, everyone. I just want to remind everyone the discussion of our results for Q1 2022 will be relatively brief, as our results only include one month of activity of the recent acquisition, which was only completed at the end of November. Given the transformational aspect of this acquisition, comparisons to the prior periods are not particularly meaningful, given its size and scale. So we'll only be talking about the current quarter's results. I feel we now have a business of scale, which should be a platform to leverage our future growth. To reiterate what Aaron said, we are pleased to announce that in our Q1 2022, we generated $7.1 million of revenue and over $2.5 million of gross margin for the quarter. While substantially all of this revenue was from the recent acquisition, we will be continuing to build and develop our esports products and extend their reach. We're also happy with our post-acquisition results, as we are operating the business to what we expected and within plan. This execution gives us confidence that we will achieve our stated goal of $70 million for fiscal 2022. And again, to remind everyone, our fiscal year ends September 30, 2022, so that will include only 10 months of our post-acquisition activity. Looking at other aspects of our business, we ended the quarter with $11.8 million in cash, up $2.7 million from the year ended September 30th, 2021. We continue to invest in the growth of our business. Adjusted EBITDA for the quarter was negative $3.9 million. Our adjusted EBITDA is calculated by starting with our loss from operation of $7.8 million and adjusting for acquisition costs of $2.2 million, non-cash stock compensation costs of $1.4 million, and depreciation and amortization of approximately $300,000. Our net cash use and operating activities was $3.0 million. We expect to continue to invest in our esports business and products as we expand the geographical reach of our iGaming Sportsbook and esports business throughout fiscal 2022. During Q4, we completed the finance of our acquisition, which raised over $67.7 million. This was used to pay the acquisition price of 50 million Euro, as well as the acquisition cost. So we've taken significant strides in the current quarter.

And with that, I'll hand it back over to Aaron. Thank you, Jim. And thank you all for tuning in. I'd like to now open it up to the analyst for a Q&A. Operator?

Thank you. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Chris Pierce with Needham & Company. Please proceed.

Hey, good morning. One clarification question, just in the press release, and you mentioned it, single platform, can you just kind of go a little deeper on what you mean there? Because I know there was a number of brands in the acquisition, I know GoGawi, the platform you guys had prior. So just kind of, is that when you say single platform, is that something internally on your end, that's not on the customer facing side, that's a migration that you did? Can you just kind of clarify that first?

Yeah, absolutely. What that means is we actually moved our core original brand, GoGowie, from a previous provider onto the Aspire BTO bet brand. So that way we have all of our brands under one platform provider. The reason why we did this is it creates huge operational benefits. to having the same CRM systems under one roof. And it's extremely useful for us on the loyalty side to keep everything synced up through all of the brands that we acquired, plus GoGalley, plus the new brands that we plan on launching in 2022. Got it.

Perfect. And then just kind of thinking about the business you acquired, the trailing 12-month revenue, and then the pre-announcement and kind of the reiteration tonight, it looks like a higher monthly run rate. Can you kind of talk through short-term how you've been able to drive those revenues higher and then what you're thinking on the medium and longer term as well?

Yeah, absolutely. So one of the main reasons why Aspire felt that they wanted to sell the brand is because they weren't giving them the attention that they deserved. Now that the brands are in dedicated resources that are putting their full force and attention into those B2C products, we're able to optimize a lot of the marketing efforts and tailor a lot of the affiliate deals so that way we can drive revenue. And not to say that Aspire wasn't doing a good job before. The products were growing, healthy assets, and that's the reason why we purchased them. But we always felt that we were going to be able to improve upon what Aspire built originally.

Got it. And then, so that's kind of the iGaming, you know, kind of the legacy piece of the business. Can you talk about, you know, how you can help to penetrate these customers with esports? And that's it for me.

Yeah. So first, for a wagering platform, it's always better to have a younger customer base. This is because you have a far longer consumer lifespan and they are far cheaper to acquire. Sports wagering customers are very loyal to their platforms when you treat them well. So once you have a product they love, the turn on a sports wagering product can be extremely low with a great loyalty program. And even more important than that, it has been found in a recent study out of the UK that Gen Z and millennials are 4.3 times more likely to wager on esports and 4.5 times more likely to bet on iGaming and casino products. And the demand for esports as an entertainment product and betting offering is also anticipated to rise as 37% of UK adults said they expect to watch esports in the future, more than twice the current 15% who do so now. This is according to a survey of 20,000 adults across 16 markets in the UK. Keep in mind, there are already 550 million fans of esports globally, and we are here to build products for that audience by developing odds and modeling that is fair to the consumer, a modern UI UX that gives them a site they are comfortable with, and technologies that allow them to bet where they watch the sports they love.

Got it. And then just, I guess, one more clarification, if I can slip it in. you talked about calendar 2022, the two new products, the e-sports book in Europe and the, you know, the browser bets e-sports book. That's the odds tightening, you know, the technology you've kind of invested in to drive a lower, lower odds for consumers. Is that, am I thinking about that correctly?

No, actually the odds and modeling product is going to be launched in the first quarter of this year. We hope to have that out very quickly. e-sports book is actually a full scale sports book. dedicated to esports consumers, but people that also want to play on traditional sportsbook as well, focused towards Gen Z and millennials, but were able to launch that product through regulated markets like the UK and Germany, whereas GoGawi is more focused on countries like the Philippines, Brazil, and Thailand.

Perfect. Thanks for clarifying. I appreciate the answer to the questions. Good luck.

Thank you, Chris.

There are no further questions from analysts. I will now turn the call over to management for closing remarks.

That's all. Thank you for everybody who could join today. We were really excited to share these results with you, and we look forward to talking to you guys next quarter. Thank you, everybody.

Thank you. This does conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.