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Settlement with Mark Weir
Golden Matrix Group, Inc. (ticker GMGI) recently released its quarterly report, which outlines significant developments within the company. Of particular note is the settlement reached with Mark Weir, one of the sellers of the 80% interest in RKings. This settlement payment, amounting to £450,000 ($548,112), includes the buyout of Mr. Weir’s shares and compensation for excess salary payments. The settlement payment effectively fulfills all obligations to Mr. Weir under the Purchase Agreement. However, disputes and claims against the other seller, Paul Hardman, are still unresolved.
Acquisition of Remaining 20% of RKings
Golden Matrix Group exercised its Buyout Right in relation to RKings, acquiring the remaining 20% of the company from each seller. The company agreed to pay each seller $661,773, which equates to their pro rata portion of the Buyout Price. This payment was made through the issuance of 82,722 shares of restricted common stock to each seller.
Complete Ownership of RKings
The acquisition of RKings provides Golden Matrix Group with complete ownership of the company, effective as of November 4, 2022. The fair value of the shares issued for the buyout was $488,060. At the time of the buyout, the carrying value of the 20% non-controlling interest in RKings was $2,928,452. The difference between the fair value of consideration paid and the non-controlling interest was recognized directly in additional paid-in capital.
Contribution of RKings to Financials
This acquisition and settlement further solidifies Golden Matrix Group’s position in the online gaming industry. RKings contributed revenues of $30,550,336 and net income attributable to the company of $1,837,588 from the date of acquisition through April 30, 2023.
Acquisition of Golden Matrix MX
In addition to the acquisition of RKings, Golden Matrix Group also acquired 99.99% of the stock of Golden Matrix MX, a newly formed shell company incorporated in Mexico. This acquisition, completed on September 7, 2022, enables the company to operate an online casino in Mexico. Golden Matrix MX had no assets or operations prior to the acquisition and was formed solely for the purpose of operating the online casino.
Investment in Intangible Assets
The company also made significant investments in intangible assets, including website development costs and trademarks. Website development costs incurred for RKings and Golden Matrix MX were capitalized, amounting to $52,788 and $0 for the three months ending April 30, 2023, respectively. Intangible assets related to software and websites are amortized on a straight-line basis over their expected useful lives, estimated to be three years.
Acquisition Method
Furthermore, in accordance with FASB ASC Section 805, Golden Matrix Group accounted for the acquisition of RKings as a business combination using the acquisition method. Goodwill was measured as the excess of the purchase price over the net of the acquisition-date values of the identifiable assets acquired and the liabilities assumed. The company recognized $2,600,000 of definite-lived intangible assets in connection with the acquisition, including $2,000,000 of trademarks and $600,000 of non-compete agreements.
Related Party Transactions
Golden Matrix Group also reported related party transactions, including employment agreements with CEO and Chairman Anthony Brian Goodman and Chief Operating Officer and Director Weiting “Cathy” Feng. Both agreements were extended for four years, with increased base salaries and annual salary increases of at least 10% per annum. The company also granted restricted stock units to both executives in recognition of their services.
Conclusion
The quarterly report highlights Golden Matrix Group, Inc.’s positive progress and growth. With the resolution of disputes, acquisition of full ownership of RKings, and expansion into the Mexican online casino market, the company is well-positioned for continued success in the online gaming industry.
Overall Summary
Overall, Golden Matrix Group’s quarterly report showcases the company’s achievements and ongoing efforts as it strengthens its position in the market through strategic acquisitions and settlements.
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