Table of Contents
Overview
Golden Matrix Group, Inc. (GMGI), a software development company that provides services for the online gaming industry, recently released its quarterly report for the period ending April 30, 2023. The report showed a net loss for the company due to increased expenses, including stock-based compensation. However, GMGI experienced significant growth in revenue during the quarter.
Revenue Recognition Process
GMGI follows a five-step process outlined by the Financial Accounting Standards Board for revenue recognition. The company generates revenue from software usage, royalty charges, and prize competitions. In its online casino operation in Mexico, GMGI generates revenue from user wagers, net of payouts and incentives.
Financial Results
During the three months ended April 30, 2023, GMGI reported a net loss of $533,753, compared to a net income of $586,984 in the same period last year. The loss was primarily due to increased expenses, including stock-based compensation, totaling $808,661 for the quarter. However, the company’s revenue increased significantly from $4,234,201 in Q1 2022 to $7,849,065 in Q1 2023.
Revenue Growth
The growth in revenue was driven by the popularity of GMGI’s online casino operation in Mexico, which offers digital versions of wagering games available in land-based casinos. Increased user wagers and royalty charges on third-party gaming content contributed to the revenue growth.
Earnings per Share
GMGI’s earnings per common share were negative $0.01 for the three months ended April 30, 2023, compared to positive $0.02 in the same period last year. The diluted earnings per common share also showed a decline, reflecting the impact of outstanding stock options and warrants on the company’s financial performance.
Expenses
GMGI incurred expenses of $217,987 related to its UK operations during the first six months of 2023. The company has deferred tax liabilities of $19,489 and accrued income tax liabilities of $564,944 as of April 30, 2023.
Foreign Currency Translation
GMGI translates the financial statements of its foreign operations into US dollars using average exchange rates for income statement amounts and end-of-period exchange rates for assets and liabilities. The company recorded foreign currency translation adjustments of $96,343 during the three months ended April 30, 2023.
Treasury Stock
Regarding treasury stock, GMGI did not have any activity during the first six months of 2023.
Fair Value Measurement
GMGI follows fair value measurement guidelines outlined by ASC Topic 820. The company uses Level 3 inputs for its valuation methodology for warrant derivative liabilities and embedded conversion option liabilities.
Accounts Receivable
As of April 30, 2023, GMGI had accounts receivable balance of $3,597,389. The company settled $1,000,000 of accounts payable with accounts receivable during the first six months of 2023. GMGI also has accounts receivable from a related party, Articulate Pty Ltd., which is owned by CEO Anthony Brian Goodman and his wife Marla Goodman. As of April 30, 2023, the balance of accounts receivable from the related party was $322,443.
Prepaid Expenses
Prepaid expenses include prepayments to suppliers for gaming content usage, Nasdaq listing fees, rent, insurance, and legal services. The balance of prepaid expenses was $183,771 as of April 30, 2023.
Short-term Deposits
GMGI holds short-term deposits for office lease purposes. As of April 30, 2023, the company had a short-term deposit of $54,133 related to an office lease in Australia.
Recent Acquisitions
In recent acquisitions, GMGI acquired a 100% ownership interest in GMG Assets, a company formed under the laws of Northern Ireland, for £25,000. The company also acquired an 80% ownership interest in RKings, a UK-based online competition company, for £3,000,000 in cash and restricted shares of GMGI’s common stock.
Conclusion
In conclusion, GMGI’s quarterly report highlights the company’s strong revenue growth, particularly in its online casino operation in Mexico and its royalty charges on third-party gaming content. Despite reporting a net loss, the company remains optimistic about its prospects in the online gaming industry as it continues to expand its offerings and acquire new assets.
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