EQUITY

9 Months Ended

Sep. 30, 2024

EQUITY

EQUITY

NOTE 18 - EQUITY

The historical shareholders’ equity of MeridianBet Group (the accounting acquirer /legal acquiree) prior to the reverse merger (the Purchase) has been retrospectively adjusted (a recapitalization) for the equivalent number of shares received by the former owners of MeridianBet Group as required under ASC 805.

Preferred Stock

The Company has 20,000,000 shares of $0.00001 par value preferred stock authorized.

As of September 30, 2024, and December 31, 2023, 1,000 and 0 Series B preferred shares of par value $0.00001 were outstanding, respectively.

As of September 30, 2024, and December 31, 2023, 1,000 and 1,000 Series C Preferred Stock shares of par value $0.00001 were outstanding, respectively. As a result of the recapitalization, the 1,000 shares of Series C Preferred Stock outstanding as of December 31, 2023 represent the shares received by the former owners of MeridianBet Group to complete the Purchase on April 9, 2024, which were designated on April 4, 2024.

As of September 30, 2024, and December 31, 2023, 19,998,000 and 19,999,000 shares of preferred stock remained undesignated, respectively.

Common Stock

As of September 30, 2024, 300,000,000 shares of common stock, par value $0.00001 per share, were authorized and, as of December 31, 2023, 250,000,000 shares of common stock, par value $0.00001 per share, were authorized of which 122,708,617 and 83,475,190 shares were issued and outstanding, respectively. As a result of the recapitalization, the 83,475,190 shares outstanding as of December 31, 2023 represent the shares received by the former owners of MeridianBet Group to complete the Purchase. The numbers are subject to change due to the issuance of the Post-Closing Shares consideration and the conversion of the Deferred Cash Convertible Promissory Note (described in greater detail in “NOTE 22 – MERIDIANBET GROUP PURCHASE AGREEMENT”).

Common Stock Transactions

During the nine months ended September 30, 2024, 100,000 unregistered shares of restricted common stock, with a value of $564,400, were issued for services. There were no shares issued for services before April 1, 2024. 

On September 4, 2024, the Company issued 1,000,000 shares upon converting $2,000,000 of the Deferred Cash Convertible Promissory Note into common stock.

The Company has a stock payable obligation of $120,000 (20,000 shares of common stock) owed to a consultant for services rendered in September 2024. Additionally, the Company owes quarterly salaries of $120,664 to Zoran Milošević and Snežana Božović which are expected to be settled in shares, as further detailed in Note 16 - Related Party Transactions.

Option Extension

On June 14, 2024, the Company agreed to extend the exercise period of certain stock options granted to two external consultants of the Company, which options would have expired on June 18, 2024. The Company extended the expiration date of the options granted to the consultants by one year, which covered options to purchase 100,000 shares of common stock at an exercise price of $1.74 per share for each consultant. The Company recorded a total of $74,881 of expenses due to the option extension.

Stock Repurchase Program

On July 15, 2024, the Board of Directors of the Company approved a share repurchase program for the purchase of up to $5.0 million of the currently outstanding shares of the Company’s common stock. The repurchase program is scheduled to expire on July 15, 2025, when a maximum of $5.0 million of the Company’s common stock has been repurchased, or when such program is discontinued by the Company.

During the nine months ended September 30, 2024, the Company purchased the following shares of common stock in open market purchases:

Date	Shares		Price per Share		Total Amount
September 10, 2024		700	$	2.3869	$	1,671
Total		700			$	1,671

The shares purchased are held in treasury until the transfer agent actually accepts the repurchased shares for cancellation and updates the record to cancel the shares, and the treasury stock is carried at cost. On October 8, 2024, the 700 treasury shares were cancelled by the transfer agent and the number of outstanding shares was reduced by the same amount. There are no commitments to purchase additional shares of common stock.

2018 Equity Incentive Plan

On April 1, 2024, the Company assumed Golden Matrix’s 2018 Equity Incentive Plan following the Purchase.

As of April 1, 2024, Golden Matrix had 660,000 options outstanding. The following table represents the stock option activity for the nine months ended September 30, 2024:

Options	Number Outstanding			Weighted Average Exercise Price
Options Outstanding as of April 1, 2024		660,000		$	3.03
Options expired		(100,000	)	$	6.62
Options exercised		(20,000	)	$	1.74
Options Outstanding as of September 30, 2024		540,000		$	2.42
Options Exercisable as of September 30, 2024		540,000		$	2.42

The fair value of stock options was measured using the Black-Scholes option pricing model. The Black-Scholes valuation model takes into consideration the share price of the Company, the exercise price of the option, the amount of time before the option expires, and the volatility of share price. Compensation expense is charged to operations through the vesting period. The amount of cost is calculated based on the accounting standard ASU 2018-07.

The total compensation cost related to stock options granted including the option extension as discussed above was $98,582 for the nine months ended September 30, 2024. There was no compensation cost related to stock options before April 1, 2024.  

2022 Equity Incentive Plan

On April 1, 2024, the Company assumed Golden Matrix’s 2022 Equity Incentive Plan (the “2022 Plan”) following the Purchase. The 2022 Plan provides an opportunity for any employee, officer, director or consultant of the Company, subject to limitations provided by federal or state securities laws, to receive (i) incentive stock options (to eligible employees only); (ii) nonqualified stock options; (iii) restricted stock; (iv) restricted stock units, (v) stock awards; (vi) shares in performance of services; (vii) other stock-based awards; or (viii) any combination of the foregoing. In making such determinations, the Board of Directors may take into account the nature of the services rendered by such person, his or her present and potential contribution to the Company’s success, and such other factors as the Board of Directors of the Company in its discretion shall deem relevant.

As of April 1, 2024, Golden Matrix had 1,408,900 RSUs outstanding. The following table represents the RSUs activity for the nine months ended September 30, 2024:

RSUs	Number Outstanding
RSUs Outstanding as of April 1, 2024		1,408,900
RSUs granted		1,473,000
RSUs forfeited		(199,850)
RSUs vested		(560,750)
RSUs Outstanding as of September 30, 2024		2,121,300

On May 9, 2024, the Company granted 500,000 RSUs to Zoran Milošević, Snežana Božović, and William Scott as discussed above under “NOTE 17 – RELATED PARTY TRANSACTIONS”.

The following table represents the outstanding RSUs granted to Directors and related parties that are subject to performance metrics (“Performance RSUs”).

Recipient	Position with Company	Number of Outstanding RSUs
William Scott	Chairman of the Board of Directors		50,000
Anthony Brian Goodman	President, Chief Executive Officer (Principal Executive Officer), Secretary, and Director		250,000
Zoran Milošević	Chief Executive Officer of MeridianBet Group		250,000
Weiting ‘Cathy’ Feng	Chief Operating Officer and Director		125,000
Snežana Božović	Secretary of MeridianBet Group		125,000
Murray G. Smith	Independent Director		50,000
Thomas E. McChesney	Independent Director		50,000

The Performance RSUs described above vest at the rate of 1/2 of such RSUs based on (1) the Company meeting certain revenue, and (2) Adjusted EBITDA targets for the year ended December 31, 2024, as discussed below, to be settled in shares of common stock. Specifically, the RSUs vest, to the extent and in the amounts set forth below, to the extent the following performance metrics are met by the Company as of the dates indicated, and to the extent such persons are still providing services to the Company on the applicable vesting dates:

	Revenue Targets			Adjusted EBITDA Targets
Performance Period	Target Goal		RSUs Vested	Target Goal		RSUs Vested
Year ended December 31, 2024	$	48,591,457	*	$	2,637,004	*

* 1/2 of the total Performance RSUs granted to each RSU recipient above.

On May 9, 2024, the Company granted 868,000 time-based RSUs to the employees of MeridianBet Group, in consideration for services rendered by such employee through the end of applicable vesting periods of the awards.

 2023 Equity Incentive Plan

On April 1, 2024, the Company assumed Golden Matrix’s 2023 Equity Incentive Plan (the “2023 Plan”) following the Purchase. The 2023 Plan provides an opportunity for any employee, officer, director or consultant of the Company, subject to limitations provided by federal or state securities laws, to receive (i) incentive stock options (to eligible employees only); (ii) nonqualified stock options; (iii) restricted stock; (iv) restricted stock units, (v) stock awards; (vi) shares in performance of services; (vii) other stock-based awards; or (viii) any combination of the foregoing. In making such determinations, the Board of Directors may take into account the nature of the services rendered by such person, his or her present and potential contribution to the Company’s success, and such other factors as the Board of Directors of the Company in its discretion shall deem relevant. Subject to adjustment in connection with the payment of a stock dividend, a stock split or subdivision or combination of the shares of common stock, or a reorganization or reclassification of the Company’s common stock, the aggregate number of shares of common stock which may be issued pursuant to awards under the 2023 Plan is the sum of (i) five million (5,000,000) shares, and (ii) an automatic increase on April 1st of each year for a period of nine years commencing on April 1, 2024 and ending on (and including) April 1, 2033, in an amount equal to the lesser of (A) five percent (5%) of the total shares of common stock of the Company outstanding on the last day of the immediately preceding fiscal year (the “Evergreen Measurement Date”); and (B) five million (5,000,000) shares of common stock; provided, however, that the Board may act prior to April 1st of a given year to provide that the increase for such year will be a lesser number of shares of common stock. Notwithstanding the foregoing, no more than a total of 50,000,000 shares of common stock (or awards) may be issued or granted under the 2023 Plan in aggregate, and no more than 50,000,000 shares of common stock may be issued pursuant to the exercise of Incentive Stock Options.

The following table represents the RSUs activity for the nine months ended September 30, 2024:

RSUs	Number Outstanding
RSUs Outstanding as of April 1, 2024		-
RSUs granted		10,000
RSUs forfeited		-
RSUs vested		-
RSUs Outstanding as of September 30, 2024		10,000

The total compensation cost related to RSUs was $1,132,968 and $2,349,157 for the three and nine months ended September 30, 2024. There was no compensation cost related to RSUs before April 1, 2024.