(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes☐ ☒ No ☒☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐No☒

The registrant had ~~13,048,769~~ 26,206,159 shares of common stock outstanding aton May ~~17, 2021.~~12, 2023.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve substantial risks and uncertainties. All statements, other than statements of historical fact, contained in this Quarterly Report on Form 10-Q, including statements regarding our strategy, future operations, future financial position, future revenue, projected costs, prospects, plans and objectives of management, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

The forward-looking statements in this Quarterly Report on Form 10-Q include, but are not limited to those described under the “Risk Factors” section and include, among other things:

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.

We have included important factors in the cautionary statements included in this Quarterly Report on Form 10-Q, particularly in the “Risk Factors” section, that we believe could cause actual results or events to differ materially from the forward-looking statements that we make. New risk factors and uncertainties may emerge from time to time, and it is not possible for management to predict all risk factors and uncertainties. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, collaborations, joint ventures or investments we may make or enter into.

The accompanying notes are an integral part of these unaudited consolidated financial statements.

~~Esports Technologies,~~EBET, Inc. (“~~Esports Tech”~~EBET” or “the Company”) was formed on September 24, 2020 as a Nevada corporation. ~~Esports Tech~~EBET is a technology company ~~creating and~~ operating platforms focused on igaming including casino, sportsbook and esports ~~and competitive gaming.~~events. The Company operates under a Curacao gaming sublicense and ~~can~~under a strategic set of agreements with Aspire Global plc (“Aspire”) as a platform provider allowing EBET to provide online betting services to various countries around the world. ~~The majority~~

Acquisition of the ~~Company’s customers are based in the Philippines. The Company’s consolidated financial statements include its accounts and the accounts~~B2C business of ~~its 100% owned subsidiaries, namely~~Aspire Global E-Sports Entertainment Group, LLC (“Global E-Sports”), ESEG Limited (“ESEG”) and Gogawi Entertainment Group (“Gogawi”) (collectively referred to as the “Company,” “we,” “our,” or “us”). Global E-Sports, a Nevada limited liability company, was incorporated in Nevada on June 28, 2016. ESEG, a Belize company was incorporated onplc

On October ~~31, 2016. Gogawi, a Cypress company was incorporated on December 8, 2018 and has always been a wholly owned subsidiary of ESEG. On December 8, 2020,~~1, 2021, the Company, ~~incorporated Esportsbook~~and Esports Product Technologies ~~Limited~~Malta Ltd. (“~~Esportsbook”~~Esports Malta”) entered into a Share Purchase Agreement (the “Acquisition Agreement”) with Aspire and various Aspire group companies to acquire all of the issued and outstanding shares of Karamba Limited. The total acquisition price was €65,000,000 paid as follows: (i) cash amount of €50,000,000; (ii) €10,000,000, payable in ~~Ireland as a wholly-owned subsidiary~~accordance with the terms of ~~Esports Tech. All amounts included in this Form 10-Q~~an unsecured subordinated promissory note (the “Note”); and (iii) shares of Company common stock, which are ~~expressed in U.S. Dollars, unless otherwise noted.~~valued at €5,000,000 (based on the weighted-average per-share price of the ten days prior to the execution date of the Acquisition Agreement (the “Exchange Shares”). See Notes 3, 4 and 5 for additional information.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain equity or debt financings to continue operations. The Company has ~~recurring losses~~a history of and ~~generated~~expects to continue to report negative cash flows from operations ~~since inception. In April 2021,~~and a net loss. The Company's forecasts for 2023 and beyond indicate that it we will need additional funding in order to have sufficient financial resources to continue to settle its debts as they fall due. The Company has taken significant measures to increase the profitability of its business in the short term. These actions include optimizing the efficiency of marketing campaigns, reducing the total number of employees and contractors, terminating software and other immaterial contracts as well as generally reducing the operating costs of the business. These efforts have also resulted in an increased focus on the Company’s i-gaming business and a significant reduction in the investment of the Company’s esports products and technologies, which resulted in the recognition of an impairment loss on certain intangible assets and fixed assets. As a result of the Company’s actions as referenced above, it does not expect to launch its esports products in the short or medium term. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company ~~completed its Initial Public Offering (“IPO”)~~be unable to continue as a going concern. The Company may seek additional funding through a combination of equity offerings, debt financings, government or other third-party funding, commercialization, marketing and ~~issued 2,400,000 shares of common stock for gross~~distribution arrangements, other collaborations, strategic alliances and licensing arrangements and delay planned cash ~~proceeds of $14,400,000. See note 9 for further information.~~outlays or a combination thereof. Management cannot be certain that such events or a combination thereof can be achieved.

The outbreak of the 2019 novel coronavirus disease (“COVID-19”), which was declared a global pandemic by the World Health Organization on March 11, 2020, and the related responses by public health and governmental authorities to contain and combat its outbreak and spread, has severely impacted the U.S. and world economies. Economic recessions, including those brought on by the COVID-19 outbreak may have a negative effect on the demand for the Company’s products and the Company’s operating results. The range of possible impacts on the Company’s business from the coronavirus pandemic could include: (i) changing demand for the Company’s online betting products; and (ii) increasing contraction in the capital markets.

A significant or prolonged decrease in consumer spending on entertainment or leisure activities would also likely have an adverse effect on demand for the Company’s products, reducing cash flows and revenues, and thereby materially harming the Company’s business, financial condition and results of operations. In addition, a materially disruptive resurgence of COVID-19 cases or the emergence of additional variants or strains of COVID-19 could cause other widespread or more severe impacts depending on where infection rates are highest. As steps taken to mitigate the spread of COVID-19 necessitated a shift away from a traditional office environment for many employees, the Company implemented business continuity programs to ensure that employees were safe and that the business continued to function with minimal disruptions to normal work operations while employees worked remotely. The Company will continue to monitor developments relating to disruptions and uncertainties caused by COVID-19.

The significant accounting policies followed in the preparation of the consolidated financial statements are as follows:

The accompanying unaudited financial statements of the Company, include the accounts of the Company and its wholly-owned subsidiaries, and have been prepared in accordance with generally accepted accounting principles accepted in the United States (“U.S. GAAP”) for interim unaudited financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The unaudited financial statements include all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary in order to make the condensed financial statements not misleading. Operating results for the ~~three and~~ six months ended March 31, ~~2021~~2023, are not necessarily indicative of the final results that may be expected for the year ended September 30, ~~2021.~~2023. For more complete financial information, these unaudited financial statements should be read in conjunction with the audited consolidated financial statements for the year ended September 30, ~~2020~~2022 included in our Form ~~S-1~~10-K filed with the SEC. Notes to the consolidated financial statements which would substantially duplicate the disclosures contained in the audited consolidated financial statements for the most recent fiscal period, as reported in the Form ~~S-1,~~10-K, have been omitted. All intercompany accounts, transactions and balances have been eliminated in consolidation.

Certain reclassifications have been made to prior period amounts to conform to the current year presentation.

Accounts receivables are recorded at amortized cost, less any allowance for doubtful accounts. Accounts receivable consists primarily of amounts due from our platform provider. The receivable balance as of September 30, 2022 owed to the Company represents the net amount owed to the Company by Aspire related to the strategic agreement for the Company’s i-gaming platform and is stated at historical cost less any allowance for doubtful accounts. The allowance for doubtful accounts was $0 as of March 31, 2023 and September 30, 2022.

There is currently no specific guidance under GAAP or alternative accounting framework for the accounting for cryptocurrencies recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations.

~~Cryptocurrencies held are accounted for as an indefinite-lived intangible asset under ASC 350,~~ ~~Intangible – Goodwill and Other~~. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.

The Company uses its cryptocurrencies to pay vendors and users. The Company also receives payments on its receivables and player deposits in cryptocurrency. Gains and losses realized upon settlement of cryptocurrencies are also recorded in general and administrative expense in our consolidated statements of operations.

The Company’s ~~other~~ intangible ~~asset~~assets consist primarily of customer relationships, trademarks and internet domain ~~names, which~~names. Certain intangible assets have a defined useful life and others are anclassified as indefinite-lived ~~intangible.~~intangible assets. Other intangible assets with a defined useful life are amortized over their estimated useful economic lives on a straight-line basis. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted.

Long-lived assets consist of software and equipment, finite-lived acquired intangible assets, such as license agreements, and indefinite-lived assets such as internet domain names. Long-lived assets are tested for recoverability whenever events or changes in business circumstances indicate that the carrying amount of the asset may not be fully recoverable. Impairment expense is recognized to the extent an asset’s expected undiscounted future cash flows are less than the asset’s carrying amount.

The Company accounts for leases under ASC 842. The Company assesses whether a contract contains a lease on its execution date. If the contract contains a lease, lease classification is assessed upon its commencement date under ASC 842. For leases that are determined to qualify for treatment as operating leases, rent expense is recognized on a straight-line basis over the lease term. Leases that are determined to qualify for treatment as finance leases recognize interest expense as determined using the effective interest method with corresponding amortization of the right-of-use assets. For leases with terms of 12 months and greater, an asset and liability are initially recorded at an amount equal to the present value of the unpaid lease payments over the lease term. In determining the lease term for each lease, the Company includes options to extend the lease when it is reasonably certain that the option will be exercised. The Company uses the interest rate implicit in the lease, when known, or its estimated incremental borrowing rate, which is derived from information available at the lease commencement date including prevailing financial market conditions, in determining the present value of the unpaid lease payments.

The Company’s only significant lease is for office space in Malta, which has a two-year lease term beginning August 1, 2021, and is classified as an operating lease. The lease has an option to extend the term for an additional two years with a 10% increase in annual rent. On May 1, 2023, the Company notified the landlord that it will not renew the lease beyond its expiration date of July 31, 2023. The Company paid €176,001 at commencement and owed an additional €160,001 in August 2022. The Company has been making monthly payments of €13,335 on this annual payment. The Company recognized a right of use asset and lease liability of $381,346 at commencement based on the present value of lease payments at commencement and utilizing an estimate incremental borrowing rate of 10%.

The following table summarizes the lease-related assets and liabilities recorded in the consolidated balance sheets at March 31, 2023 and September 30, 2022:

The following table provides the maturities of lease liabilities at March 31, 2023:

Operating lease expense was $61,763 and $71,645 during the three months ended March 31, 2023 and 2022, respectively. Operating lease expense was $114,820 and $103,522 during the six months ended March 31, 2023 and 2022, respectively.

The Company records liabilities for user account balances at a given reporting period based on deposits made by players either to the Company or the sales affiliate, less any losses on wagers and payout made to players. Liabilities to users amounts are not required to be backed by cash reserves of the Company. The user balances are maintained by the Company’s third-party platform provider, and the Company has an asset of an equivalent amount included within Prepaid expense and other current assets on the Company’s consolidated balance sheets.

The Company recognizes revenue in accordance with ASC Topic 606, Revenue From Contracts With Customers, which ~~was adopted on October 1, 2018 using the modified retrospective method. ASC Topic 606~~ requires companies to recognize revenue in a manner that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, the standard requires disclosures of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. ~~The adoption of ASC Topic 606 had no impact to the Company’s comparative consolidated financial statements.~~ Revenue is recognized based on the following five step model:

~~Identification of the contract with a customer~~

~~Identification of the performance obligations in the contract~~

~~Determination of the transaction price~~

~~Allocation of the transaction price to the performance obligations in the contract~~

·	Identification of the contract with a customer

·	Identification of the performance obligations in the contract

·	Determination of the transaction price

·	Allocation of the transaction price to the performance obligations in the contract

·	Recognition of revenue when, or as, the Company satisfies a performance obligation

No single customer ~~exceeded~~accounted for more than 10% of revenue ~~during~~for the three and six months ended March 31, ~~2021 and 2020.~~2023 or 2022. In addition, no disaggregation of revenue is required because all current revenue is generated from gaming revenue.

i-gaming, or online casino, typically includes digital versions of wagering games available in land-based casinos, such as blackjack, roulette and slot machines. For these offerings, the Company functions similarly to land-based casinos, generating revenue through casino hold, as users play against the house. i-gaming revenue is generated from user wagers net of payouts made on users’ winning wagers and incentives awarded to users.

Sportsbook or sports betting involves a user wagering money on an outcome or series of outcomes occurring. When a user’s wager wins, the Company pays the user a pre-determined amount known as fixed odds. Sportsbook revenue is generated by setting odds such that there is a built-in theoretical margin in each sports wagering opportunity offered to users. Sportsbook revenue is generated from users’ wagers net of payouts made on users’ winning wagers and incentives awarded to users.

Performance Obligations

The Company operates an online betting platform allowing users to place wagers on a variety of live sporting events, i-gaming and esports events. Each wager placed by users create a single performance obligation for the Company to administer each event wagered. The performance obligation is satisfied once the event wagered on has been completed. Gross gaming revenue is the aggregate of gaming wins and losses based on results of each event that customers wager bets on.

Transaction Price Considerations

Variability in the transaction price arises primarily due to market-based pricing, cash discounts, revenue sharing and usage-based fees. The Company offers loyalty programs, free plays, deposit bonuses, discounts, rebates and other rewards and incentives to its customers. Revenue for Sportsbook and i-gaming is collected prior to the contest or event and is fixed once the outcome is known. Prizes paid and payouts made to users are recognized when awarded to the player.

Cost of Revenue

Cost of revenue consists of third-party costs associated with the betting software platform and gaming taxes.

Sales and Marketing Expenses

Sales and marketing expenses consist primarily of expenses associated with amounts paid to affiliates, advertising and related software, strategic league and team partnerships and costs related to free to play contests, and the compensation of sales and marketing personnel, including stock-based compensation expenses. Variable commission fees are paid to sales affiliates based on a percentage of revenue generated from the affiliate. The commissions rebated to affiliates are recorded as a ~~reduction to gross gaming revenue.~~component of marketing expense. Advertising costs are expensed as incurred.

~~Cost of Revenue~~Product and Technology Expenses

Product and technology expenses consist primarily of expenses which are not subject to capitalization or otherwise classified within Cost of ~~revenue consists~~Revenue. Product and Technology expenses include software licenses, depreciation of ~~third-party~~hardware and software and costs ~~associated with~~related to the ~~betting software platform~~compensation of product and ~~amortization of capitalized software costs.~~technology personnel, including stock-based compensation.

General and Administrative Expenses

General and administrative expenses include costs related to the compensation of the Company’s administrative functions, insurance costs, professional fees and consulting expense.

Fair value of financial instruments

The Company discloses fair value measurements for financial and non-financial assets and liabilities measured at fair value. Fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The accounting standard establishes a fair value hierarchy that prioritizes observable and unobservable inputs used to measure fair value into three broad levels, which are described below:

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

Level 2: Observable prices that are based on inputs not quoted on active markets but are corroborated by market data.

Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

The following tables set forth the fair value of the Company’s financial assets and liabilities measured at fair value as of March 31, 2023 and September 30, 2022 based on the three-tier fair value hierarchy:

Schedule of fair value of financial assets and liabilities

Fair Value Measurements at March 31, 2023

Level 1

Level 2

Level 3

Assets

Cash

3,469,076

–

Total assets

3,469,076

–

Liabilities

Senior Notes, net of discount

–

19,581,643

–

Note due to Aspire

–

12,326,742

–

Convertible notes payable, net of discount

–

681,891

–

Other notes payable, net of discount

–

533,972

–

Total liabilities

–

33,124,248

–

Fair Value Measurements at September 30, 2022

Level 1

Level 2

Level 3

Assets

Cash

5,486,210

–

Derivative asset

–

1,116,153

–

Total assets

5,486,210

1,116,153

–

Liabilities

Senior Notes, net of discount

–

19,595,694

–

Note due to Aspire

–

10,636,343

–

Convertible notes payable, net of discount

–

1,606,891

–

Other notes payable, net of discount

–

509,520

–

Total liabilities

–

32,348,448

–

Derivative Instruments

The Company accounts for its derivative financial instruments in accordance with ASC Topic 815, Derivatives and Hedging (“ASC 815”) and ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”). The Company uses derivative financial instruments to reduce its exposure to changes in foreign currency exchange rates. All derivatives are recorded at fair value on the Consolidated Balance Sheets and changes in the fair value of derivative financial instruments are either recognized in Accumulated other comprehensive income (loss) (a component of Total shareholders' equity), Long-term debt or Net income depending on the nature of the underlying exposure, whether the derivative is formally designated as a hedge and, if designated, the extent to which the hedge is effective. The Company classifies the cash flows at settlement from derivatives in the same category as the cash flows from the related hedged items.

The Company's derivative instruments do not subject its earnings or cash flows to material risk, as gains and losses on these derivatives are intended to offset losses and gains on the item being hedged. The Company does not enter into derivative transactions for speculative purposes and it does not have any non-derivative instruments that are designated as hedging instruments pursuant to ASC 815. The Company manages the credit risk of its counterparties by dealing only with institutions that it considers financially sound and considers the risk of non-performance to be remote.

The Company entered into foreign exchange forward contracts to mitigate the change in fair value of specific liabilities and cash flows on the Consolidated Balance Sheets that were denominated in Euros related to the acquisition of the Aspire B2C business in November 2021. These undesignated hedging instruments are recorded at fair value as a derivative asset or liability on the Consolidated Balance Sheets with their corresponding change in fair value recognized in Other income (expense), net. The cash flows related to the gains and losses are classified in the consolidated statements of cash flows as part of cash flows from operating activities. The total notional amount of outstanding undesignated derivative instruments was $16,050,000 as of September 30, 2022. The Company recognized a gain on derivative instruments of $1,239,510 during the year ended September 30, 2022. During the six months ended March 31, 2023, the Company settled all of its foreign exchange forward contracts, receiving cash proceeds of $973,965 and recognized a loss of $142,187.

Foreign Currency

The Company’s reporting currency is the U.S. Dollar. Certain subsidiaries of the Company have a functional currency other than the U.S. Dollar, and are translated to the Company’s reporting currency at each reporting date. Non-monetary items are translated at historical rates. Monetary assets and liabilities are translated from British pounds and Euro into U.S. Dollars, at the period-end exchange rate, while foreign currency expenses are translated at the exchange rate in effect on the date of the transaction. The net effect of translation is reflected as other comprehensive income. The gains or losses on transactions denominated in currencies other than an entity’s functional currency are included in the consolidated statement of operations.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of assets acquired and liabilities assumed. Goodwill is reviewed for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount may be impaired. When assessing goodwill for impairment, the Company uses qualitative and if necessary, quantitative methods in accordance with FASB ASC Topic 350, Goodwill. The Company also considers its enterprise value and if necessary, discounted cash flow model, which involves assumptions and estimates, including the Company’s future financial performance, weighted average cost of capital and interpretation of currently enacted tax laws.

Circumstances that could indicate impairment and require the Company to perform a quantitative impairment test include a significant decline in the Company’s financial results, a significant decline in the Company’s enterprise value relative to its book value, an unanticipated change in competition of the Company’s market share and a significant change in the Company’s strategic plans.

Recently Issued Accounting Pronouncements

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470- 20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity (“ASU 2020-06”), which simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. This ASU (1) simplifies the accounting for convertible debt instruments and convertible preferred stock by removing the existing guidance in ASC 470-20, Debt: Debt with Conversion and Other Options, that requires entities to account for beneficial conversion features and cash conversion features in equity, separately from the host convertible debt or preferred stock; (2) revises the scope exception from derivative accounting in ASC 815-40 for freestanding financial instruments and embedded features that are both indexed to the issuer’s own stock and classified in stockholders’ equity, by removing certain criteria required for equity classification; and (3) revises the guidance in ASC 260, Earnings Per Share, to require entities to calculate diluted earnings per share (EPS) for convertible instruments by using the if-converted method. In addition, entities must presume share settlement for purposes of calculating diluted EPS when an instrument may be settled in cash or shares. The Company will adopt this guidance on October 1, 2023, and is currently evaluating the potential impact to its consolidated financial statements.

From time to time, new accounting pronouncements are issued by the Financial Accounting Standard Board (“FASB”) or other standard setting bodies that the Company adopts as of the specified effective date. The Company does not believe that the impact of recently issued standards that are not yet effective will have a material impact on the Company’s financial position or results of operations upon adoption.

NOTE 3 – BUSINESS COMBINATIONS

Acquisition of the B2C business of Aspire Global plc

On October 1, 2021, in order to accelerate the growth and expand market access for our product offerings, the Company and Esports Malta entered into the “Acquisition Agreement” with Aspire, Aspire Global International Limited, AG Communications Limited, Aspire Global 7 Limited (collectively the “Aspire Related Companies”), and Karamba Limited (“Karamba”) whereby Esports Malta acquired all of the issued and outstanding shares of Karamba. The total acquisition price, paid at the closing of the acquisition of the Karamba shares, was €65,000,000 paid as follows: (i) a cash amount of €50,000,000; (ii) €10,000,000, paid in accordance with the terms of an unsecured subordinated promissory note (the “Note”); and (iii) shares of Company common stock, which were valued at €5,000,000 (based on the weighted-average per-share price of the ten days prior to the execution date of the Acquisition Agreement). The transaction closed on November 29, 2021.

Unaudited Proforma Information

The following schedule contains pro-forma consolidated results of operations for the three months and six months ended March 31, 2023 and 2022 as if the Aspire B2C acquisition occurred on October 1, 2021. The pro forma results of operations are presented for informational purposes only and are not indicative of the results of operations that would have been achieved if the acquisition had taken place on October 1, 2021, or of results that may occur in the future.

Schedule of business combination proforma results
	Three Months Ended						Six Months Ended
	March 31, 2023			March 31, 2022			March 31, 2023			March 31, 2022
Revenue	$	11,580,490		$	19,002,588		$	25,988,454		$	36,174,053
Operating loss		(964,448	)		(9,067,785	)		(3,119,367	)		(16,755,482	)
Net loss		(4,011,675	)		(11,839,881	)		(11,569,440	)		(21,992,609	)
Net loss attributable to common shareholders		(5,569,251	)		(15,941,661	)		(14,663,985	)		(27,545,840	)
Loss per common share - basic and diluted	$	(0.25	)		(1.12	)	$	(0.75	)		(1.97	)

The most significant proforma adjustments relate to annual interest on the Senior Notes and Note to Aspire issued in connection with the acquisition, amortization expense of the estimated intangible assets recognized as part of the purchase price allocation, and the preferred dividends incurred in connection with the financing of the acquisition.

NOTE 4 – BORROWINGS

The following is a summary of borrowings outstanding as at March 31, 2023 and September 30, 2022:

Schedule of borrowings outstanding
			March 31, 2023
	Contractual Interest		Principal outstanding balance	Principal outstanding balance	Unamortized debt discount		Accrued Interest	Issuance costs		Carrying amount
	rate	Cur	Local	USD	USD		USD	USD		USD
Senior notes	15%	USD	28,016,051	28,016,051	(6,559,060	)	–	(1,875,348	)	19,581,643
Note due to Aspire	10%	EUR	10,000,000	10,875,000	–		1,451,742	–		12,326,742
Convertible notes	10%	USD	681,891	681,891	–		–	–		681,891
Other	0%	USD	675,000	675,000	(141,028	)	–	–		533,972
Total borrowings				40,247,942	(6,700,088	)	1,451,742	(1,875,348	)	33,124,248

Current										20,263,534
Long-term										12,860,714
Total borrowings										33,124,248


			September 30, 2022
	Contractual Interest			Principal outstanding balance	Principal outstanding balance	Unamortized debt discount		Accrued Interest	Issuance costs		Carrying amount
	rate	Cur		Local	USD	USD		USD	USD		USD
Senior notes	15%	USD		30,558,446	30,558,446	(8,526,776	)	–	(2,435,976	)	19,595,694
Note due to Aspire	10%	EUR		10,000,000	9,748,000	–		888,343	–		10,636,343
Convertible notes	10%	USD		1,606,891	1,606,891	–		–	–		1,606,891
Other	0%	USD		675,000	675,000	(165,480	)	–	–		509,520
Total borrowings					42,588,337	(8,692,256	)	888,343	(2,435,976	)	32,348,448

Current											21,202,585
Long-term											11,145,863
Total borrowings											32,348,448

Senior Notes

On November 29, 2021, the Company entered into a credit agreement (the “Credit Agreement”) with CP BF Lending, LLC (“Lender”), pursuant to which the Lender agreed to make a single loan to the Company of $30,000,000 (the “Loan”). The Loan bears interest on the unpaid principal amount at a rate per annum equal to 15.0% as follows: (1) cash interest on the unpaid principal amount of the Loan at a rate equal to 14.0% per annum, plus (2) payable-in-kind interest (“PIK Interest”) on the unpaid principal amount of the Loan at a rate equal to 1.0% per annum. The Company paid to Lender on the closing date a non-refundable origination fee in an amount equal to $750,000.

The Senior Note matures in 36 months, provided that the Company may receive two 12-month extensions of the maturity date by paying to the Lender (1) an extension fee equal to 1.0% of the unpaid principal balance of the Loan as of the date of such extension, and (2) all reasonable and documented out-of-pocket fees and expenses paid or incurred by Lender, in each case in connection with the extension request, including but not limited to fees and expenses for appraisals, collateral exams and audits, and legal counsel. The foregoing extension right is subject to, among other items, (i) the Loan not being in default, (ii) the representations and warranties contained in Credit Agreement being true and correct; and (iii) the Lender granting its written approval thereof in its sole discretion.

The Senior Note may be prepaid by the Company at any time. In addition, the Credit Agreement provides that in the event there shall be excess cash flow from the Aspire Business (as such concept is defined in the Credit Agreement) for any calendar month, commencing with the month ended December 31, 2022, the Company shall apply a portion of such excess cash flow amount to prepay the outstanding principal balance of the Loan; provided that no such prepayment shall be required once the unpaid principal balance of the Loan has been reduced to $15,000,000.

The Credit Agreement requires the Company to meet certain financial covenants. The Loan is secured by all of the assets of the Company and its subsidiaries. The Loan may be accelerated by the Lender upon an event of default, which in addition to customary events of default include: (i) if (1) any of the Company or its subsidiaries shall fail to maintain in full force and effect any gaming approval (as defined in the Credit Agreement) required for the operation of its business or (2) any gaming regulator shall impose any condition or limitation on any of the foregoing entities that could be reasonably expected to have a material adverse effect; or (ii) the suspension from trading or failure of the Company’s common stock to be trading or listed on the Nasdaq exchange for a period of three consecutive trading days.

As of March 31, 2022, the Company had not maintained compliance with the covenants of the Senior Notes and obtained a waiver from its lender which waiver is contingent on the completion of an equity raise of $3.5 million, which was completed in June 2022. In consideration for obtaining a waiver from the compliance with certain covenants, the Company agreed to amend the Senior Notes such that $5 million of principal loan balance becomes convertible at $3.58 per share commencing after the Company raises the $5,000,000 of common equity (including the foregoing $3.5 million). On February 2, 2023, the conversion option became exercisable upon closing of the offering that generated $6,500,000 of gross proceeds.

In connection with the Loan, the Company issued the Lender a warrant (the “Lender Warrant”) to purchase 1,567,840 shares of Company common stock at an exercise price of $25.00 per share expiring on the earlier to occur of (i) five years following the issue date or (ii) the second anniversary of the satisfaction of all obligations of the Company under the Credit Agreement. The exercise price is subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the Company’s common stock. In addition, the exercise price of the Lender Warrant is subject to “weighted-average” anti-dilution protection for issuances by the Company below the exercise price (other than certain defined exempt issuances), and, upon shareholder approval, which was received on February 9, 2022, the number of shares underlying the Lender Warrant shall also be adjusted for issuances to which the “weighted-average” anti-dilution protection applies. Pursuant to the foregoing anti-dilution provision, in connection with the $3.5 million offering completed in June 2022, the number of shares underlying the warrant increased to 1,654,538 and the exercise price was reduced to $23.69. Pursuant to the foregoing anti-dilution provision, in connection with the $6.5 million offering completed in February 2023, the number of shares underlying the warrant increased to 2,312,449 and the exercise price was reduced to $16.95. The Lender will not have the right to exercise any portion of the Lender Warrant if the Lender (together with its affiliates) would beneficially own in excess of 4.99% of the number of shares of Company common stock outstanding immediately after giving effect to the exercise, as such percentage ownership is determined in accordance with the terms of the Lender Warrant, which beneficial ownership amount, at the election of the Lender may be increased to any other percentage not in excess of 19.99% as specified by the Lender. If a fundamental transaction occurs, then the successor entity will succeed to, and be substituted for the Company, and will assume all of the Company’s obligations under the Lender Warrant with the same effect as if such successor entity had been named in the Lender Warrant itself.

On September 2, 2022, the Lender provided the Company with a limited waiver of these covenants until September 30, 2022 in exchange for a one-time payment of $151,158 to be added to the principal amount of the Senior Note. In addition, the Senior Note required the Company to maintain a minimum balance of $4.0 million in the account utilized to collect the revenues from the Company’s i-gaming business. On September 30, 2022, the Lender provided the Company with a limited waiver of these covenants until October 31, 2022 in exchange for a one-time payment of $152,032 to be added to the principal amount of the Senior Note. In addition, the Senior Note required the Company to maintain a minimum balance of $5.0 million in the account utilized to collect the revenues from the Company’s i-gaming business.

On October 6, 2022, the Lender provided the Company with an additional limited waiver allowing the foregoing minimum balance to be reduced to $4.0 million until October 31, 2022, in exchange for a one-time payment of $76,409 to be added to the principal amount of the Senior Note. On October 31, 2022, the Lender provided the Company with a limited waiver of these covenants until November 30, 2022 in exchange for a one-time payment of $229,959 to be added to the principal amount of the Senior Note. On November 30, 2022, the Lender provided the Company with a limited waiver of these covenants until December 16, 2022. On December 16, 2022, the Lender provided the Company with a limited waiver of these covenants until January 9, 2023.

On January 9, 2023, the Lender provided the Company with a limited waiver of these covenants until January 31, 2023 and required a principal payment of $3,000,000 which was made on January 10, 2023. This waiver and principal payment reduced the minimum balance in the account to $2,000,000. On January 31, 2023, the Lender provided the Company with a limited waiver of these covenants until February 17, 2023. On February 1, 2023, the Lender provided the Company with a further limited waiver of these covenants until April 28, 2023. On April 28, 2023, the Lender provided the Company with a further limited waiver of these covenants until May 12, 2023. On May 12, 2023, the Lender provided the Company with a further limited waiver of these covenants until May 26, 2023. The Company does not expect to satisfy certain of these covenants prior to May 26, 2023 and is currently in discussions with the Lender on modifying the financial covenants, although there is no assurance that the Company will be successful in making such modifications to the Senior Note.

During the three months ended March 31, 2023 and 2022, the Company recognized interest expense of $1,264,933 and $828,714, respectively, from the amortization debt discount and debt issuance costs related to the Senior Note. During the six months ended March 31, 2023 and 2022, the Company recognized interest expense of $2,529,866 and $1,345,925, respectively, from the amortization debt discount and debt issuance costs related to the Senior Note.

Note due to Aspire

The Note provides for an interest rate of 10% per annum. The maturity date of the Note will be the earlier of that date which is four years from the issuance date or a liquidity event. The Note will require repayment of the principal amount plus any accrued interest in three equal installments, payable annually starting on the second anniversary after issuance. No interest payment shall be due until that date which is the last day of the end of the second-year anniversary of issuance should the Note remain unpaid at such time. Should the Note remain unpaid at the second-year anniversary, the total accrued interest due at that time shall be paid at the second year anniversary for accrued interest for the period from the issuance date through the second year anniversary date. Thereafter, and on each annual anniversary date thereafter, the interest due for the prior annual period shall be paid. Notwithstanding the foregoing, if the Company owes greater than $15,000,000 under the Credit Agreement, then the parties agree that the Company shall repay any principal amount plus any accrued interest due through the issuance of Company common stock in lieu of any cash payment and the amount of said common stock shares to be issued by the Company shall be determined by using the Conversion Price as defined below. Should an event of default occur on the Note, then at the election of Aspire, either (i) the Operator Services Agreement will be amended such that the fees payable shall increase by 5% during the continuation of the event of default, or (ii) Aspire may elect to convert the entire outstanding principal amount plus any accrued interest into shares of common stock of the Company at a price per share based on the weighted-average per-share price for the ten trading days prior to the date of the occurrence of the event of default (“Conversion Price”). In no event shall the Conversion Price be lower than $18.00 per share (as adjusted for stock splits, stock dividends, or similar events occurring after the date hereof) and the total maximum number of shares of common stock that may be issued to Aspire upon any such conversion in the aggregate shall be 650,000 shares (as adjusted for stock splits, stock dividends, or similar events occurring after the date hereof).

Convertible Notes and other

On September 1, 2020, ESEG entered into three promissory notes, with a combined principal amount of $2,100,000. The notes bore interest at the rate of 10% per annum and matured on March 1, 2022 and are now convertible at the noteholder’s option. The Company also agreed to pay two of the lenders a total of $675,000 on September 1, 2025, bearing no interest. The Company issued each of the lenders a conversion option at a fixed price of $0.50 per share and issued 2,015,000 warrants to purchase shares of the Company’s common stock at an exercise price of $0.30 per share, each with a term of five years. The convertible notes bear interest at 10% per annum and matured on March 1, 2022. The holder may convert the note into shares of common stock at any time throughout the maturity date, to the extent and provided that no holder of the notes was or will be permitted to convert such notes so long as it or any of its affiliates would beneficially own in excess of 4.99% of the Company’s common stock after such conversion.

The Company evaluated the conversion option and concluded a beneficial conversion feature was present at issuance. The Company recognized the beneficial conversion feature and relative fair value of the warrants as a debt discount and additional paid in capital. The fair value of the warrants at the grant date was estimated using a Black-Scholes model and the following assumptions: 1) volatility of approximately 85% based on a peer group of companies; 2) dividend yield of 0%; 3) risk-free rate of 0.26%; and 4) an expected term of five years. The $2,100,000 debt discount will be amortized through the maturity date of the convertible notes payable. During the twelve months ended September 30, 2021, a total of $187,500 of principal was converted into 375,000 shares of common stock. During the year ended September 30, 2022, a total of $305,609 of principal and $106,891 of accrued interest was converted into 825,000 shares of common stock. During the six months ended March 31, 2023, a total of $925,000 of principal and $107,661 of accrued interest was converted into 1,465,322 shares of common stock. As of March 31, 2023, the outstanding principal and accrued interest balance of the convertible notes was $681,891 and $93,286, respectively.

During the three months ended March 31, 2023 and 2022, the Company recorded a charge of $12,369 and $11,262, respectively, in the accompanying consolidated statement of operations from the amortization of its debt discount related to the convertible notes payable and other liabilities described above. During the six months ended March 31, 2023 and 2022, the Company recorded a charge of $24,451 and $22,263, respectively, in the accompanying consolidated statement of operations from the amortization of its debt discount related to the convertible notes payable and other liabilities described above.

~~NOTE 3 – LONG-LIVED ASSETS~~

~~Software and equipment~~

~~The Company’s software and equipment consisted of the following as of March 31, 2021 and September 30, 2020:~~

March 31, 2021 September 30, 2020
Software $ 148,151 $ –
Total software and equipment 148,151 –
Accumulated depreciation (12,346 ) –
Software and equipment, net $ 135,805 $ –

On November 5, 2020, the Company entered into an asset purchase agreement with a third party to acquire certain proprietary technology data. The Company made a cash payment of $61,425 and granted warrants to purchase 32,000 shares of common stock at an exercise price of $0.25 per share for a period of five years. The fair value of the warrants was estimated to be $57,252 as of the grant date. The total consideration paid of $118,677 is included as part of software costs within property and equipment on the Company’s consolidated balance sheet. The Company also entered into an employment agreement with the seller, effective November 1, 2020. The employee will be compensated at a rate of $110,000 per year and will receive a common stock award of 100,000 shares, which vest annually over four years.

~~The software costs above relate to acquired components of the Company’s new platform which is being depreciated over an expected useful life of two years.~~

~~Intangible Assets~~

On September 1, 2020, the Company’s wholly-owned subsidiary, ESEG, entered into domain purchase agreements to acquire the rights to certain domain names from third parties. The cost to acquire the domain names was $2,239,606, based on the estimated fair value of the consideration transferred to the sellers. ESEG issued notes payable with a combined principal amount of $2,100,000, which were to mature on March 1, 2022, bearing interest at 10%. These notes were exchanged for notes of the Company in September 2020. The Company also agreed to pay a total of $675,000 on September 1, 2025, with no interest. The Company estimated discount of these liabilities totaling $535,394 at the date of the transaction, to be amortized over the maturity period of the liabilities. The domain names were recorded as an intangible asset with an indefinite useful life. The Company’s management evaluated the domain names at September 30, 2020 and determined no impairment was necessary.

~~The following table presents the activities of the Company’s cryptocurrency holdings for the three and six months ended March 31, 2021:~~

Cryptocurrency at September 30, 2020 $ 44,562
Additions of cryptocurrency 18,276
Payments of cryptocurrency (89,197 )
Gain on cryptocurrency 35,140
Cryptocurrency at March 31, 2021 $ 8,781

Additions of cryptocurrency during the six months ended March 31, 2021 represent settlement of outstanding accounts receivable of $18,158 and net deposits from players of $118. Payments of cryptocurrency during the six months ended March 31, 2021 included payments of accounts payable and accrued expenses of $89,197. Use of cryptocurrency to settle receivables and payables during the period are reflected as a component of changes in operating assets and liabilities in the consolidated statement of cash flows.

~~Other Long-Term Assets~~

On October 1, 2020, the Company entered into an option agreement which gives the Company the right to acquire a license for proprietary technology related to online betting. The Company paid $133,770 upon execution of the option agreement, and in the event the option is exercised and the license agreement is executed, the Company will pay an additional £200,000 (or approximately $270,000 as of March 31, 2021) in cash and issue 65,000 shares of common stock. The option was to initially expire on May 1, 2021, and was extended until May 6, 2021. The option was exercised on or about May 3, 2021. The Company recorded an other long-term asset of $133,770 related to the initial payment.

~~NOTE 4 – CONVERTIBLE NOTES PAYABLE AND OTHER LONG-TERM LIABILITIES~~

On September 1, 2020, ESEG entered into three promissory notes, with a combined principal amount of $2,100,000. The notes bore interest at the rate of 10% per annum and matured on March 1, 2022. The Company also agreed to pay two of the lenders a total of $675,000 on September 1, 2025, bearing no interest. The Company estimated total debt discount of these liabilities to be $535,394 at the date of the transaction, of which $279,516 related to the promissory notes payable, and $255,878 related to the other long-term liabilities. The discounts will be amortized over the maturity period of each liability. As of March 31, 2021 and September 30, 2020, the carrying amount of the other long-term liabilities was $442,680 and $422,409, respectively, which is net of the remaining discount totaling $232,320 and $252,591, respectively. The carrying amount of the convertible notes payable and associated discount is further discussed below.

On September 26, 2020, the Company assumed the notes payable with principal of $2,100,000 from ESEG. In connection with this assumption, Esports Tech issued each of the lenders a conversion option at a fixed price of $0.50 per share and issued 2,015,000 warrants to purchase shares of the Company’s common stock at an exercise price of $0.30 per share, each with a term of five years. The convertible notes bear interest at 10% per annum and mature on March 1, 2022. The holder may convert the note into shares of common stock at any time throughout the maturity date, to the extent and provided that no holder of the notes was or will be permitted to convert such notes so long as it or any of its affiliates would beneficially own in excess of 4.99% of the Company’s common stock after such conversion. The Company determined that the assignment of the notes payable by the subsidiary to the parent company was an extinguishment of the original notes payable due to the addition of a substantive conversion feature, and the Company recognized a loss on extinguishment of $265,779 during the year ended September 30, 2020.

During the three months ended December 31, 2020, a total of $187,500 of principal was converted into 375,000 shares of common stock. As of March 31, 2021, the balance due under these notes, net of unamortized discount of $1,136,012, is $776,488, with accrued interest of $116,774. During the six months ended March 21, 2021, the Company recorded a charge of $867,593 in the accompanying consolidated statement of operations from the amortization of its debt discount.

NOTE 5 – STOCKHOLDERS’ EQUITY

The Company is currently authorized to issue up to 100,000,000 shares of common stock with a par value of ~~$0.001.~~$0.001. In addition, the Company is authorized to issue 10,000,000 shares of preferred stock with a par value of ~~$0.001.~~$0.001. The specific rights of the preferred stock, when so designated, shall be determined by the board of directors.

~~During~~Shares issued in the ~~three~~current year

On February 2, 2023 the Company entered into Securities Purchase Agreements (the “Purchase Agreements”) with several institutional and accredited investors to issue, in an offering (the “February Offering”): (i) 6,372,530 shares (the “Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), and (ii) warrants to purchase up to an aggregate of 6,372,530 shares of Common Stock (the “Warrants”). The combined purchase price of one share of Common Stock and accompanying Warrant is $1.02.

Subject to certain ownership limitations, the Warrants are exercisable commencing six months ~~ended December 31, 2020,~~after issuance. Each Warrant is exercisable into one share of Common Stock at a price per share of $1.02 (as adjusted from time to time in accordance with the terms thereof) and will expire five and one-half years from the issuance date. The closing of the sales of these securities under the Purchase Agreements was on February 6, 2023.

On February 2, 2023, the Company entered into a Placement Agent Agreement (the “Placement Agent Agreement”) with WestPark Capital, Inc. (the “WestPark”), pursuant to which the Company has agreed to pay WestPark an aggregate fee equal to 7.0% of the gross proceeds received by the Company from the sale of the securities in the transaction. In addition, the Company agreed to pay to WestPark on the Closing Date a cash fee equal to 1.0% of gross proceeds received by the Company from the sale of the securities in the transaction for non-accountable expenses. The Company will also pay WestPark up to $50,000 of fees and other expenses.

The Company received gross ~~cash~~ proceeds of ~~$4,000,000 in exchange for 2,000,000 shares of common stock. In conjunction with this fundraising, broker commission~~$6,500,000 and paid fees and expenses of ~~$351,929 were paid and 173,625 common stock warrants~~$578,018.

In connection with anthe offering described above, the exercise price of ~~$2.00 and~~ a ~~five-year term were issued. The fair value~~total of ~~the~~2,019,672 warrants issued in connection with the ~~financing was estimated~~Company’s Series A Convertible Preferred Stock were adjusted to $1.02 per share. No adjustments will be ~~$228,500 as discussed below.~~

~~In January 2021,~~made to the ~~Company sold 250,014~~number of shares of common stock to investors for $3 per share, receiving gross proceeds of $750,042. The company paid $30,314 of broker fees and commissions related to this fundraising and issued 8,750 warrants to purchase common stock with anunderlying the Warrants. Additionally, the exercise price of ~~$3 per share and a term of 5 years. The fair value of~~ the ~~warrants~~Lender Warrant issued in connection with the ~~financing~~Senior notes was ~~estimated~~reset to ~~be $228,500 as discussed below.~~$16.95 and the number of shares underlying the Lender Warrant became 2,312,449, and $5,000,000 of the principal balance of the Senior Note became convertible at $3.58 per share.

~~In February~~During the six months ended March 31, 2023, the Company issued 2,065,322 shares pursuant to a conversion of principal of $925,000 and accrued interest of $107,661 on its convertible notes.

During the six months ended March 31, 2023, the Company issued 52,250 shares related to vesting of restricted stock units by employees.

Acquisition of the B2C segment of Aspire Global plc

On October 1, 2021, in connection with the Acquisition, the Company entered into ~~an agreement~~subscription agreements (the “Subscription Agreements”) with ~~a consultant where~~certain investors (the “Investors”). Pursuant to the Subscription Agreements, the Investors agreed to subscribe for and purchase, and the Company agreed to issue ~~warrants~~and sell to such Investors, simultaneous with the closing of the Acquisition Agreement, an aggregate of 37,700 shares of Series A Convertible Preferred Stock (the “Preferred Stock”) for a purchase price of $1,000.00 per share, for aggregate gross proceeds of $37,700,000 (the “Private Placement”). For each share of Preferred Stock issued, the Company issued the Investor a warrant to purchase ~~4,166~~150% of the shares of Company common stock underlying the Preferred Stock (the “Warrants”).

Pursuant to the Subscription Agreement, the Company has obtained shareholder approval of the conversion of the Preferred Stock and Warrants into Company common stock in compliance with the rules and regulations of the Nasdaq Stock Market (“Shareholder Approval”). The Preferred Stockholders are entitled to receive dividends, at a ~~term~~rate of ~~5 years~~14.0% per annum, which shall be payable quarterly in arrears on January 1, April 1, July 1 and October 1, beginning on the first such date after the issuance date. With limited exceptions, the Preferred Stockholders will have no voting rights. The dividends can be paid in either cash or in the issuance of additional preferred shares. Upon any liquidation, dissolution or winding-up of the Company, the holders of the Preferred Stock shall be entitled to receive out of the assets, whether capital or surplus, of the Company available to shareholders, an amount equal to the greater of: (i) the purchase price for each share of Preferred Stock then held, or (ii) the amount the holders would have received had the holders fully converted the Preferred Stock to Company common stock, in each case, before any distribution or payment shall be made to the holders of the Company’s common stock. The Preferred Stock is convertible into Company common stock at an initial conversion price of $28.00 per share (“Conversion Price”); provided that the Conversion Price is subject to anti-dilution protection upon any subsequent transaction at a price lower than the Conversion Price then in effect. In addition, on April 28, 2023, July 31, 2023, and October 31, 2023 (each an “Adjustment Date”), the Conversion Price was to be adjusted to the lesser of: (i) the Conversion Price in effect on the Adjustment Date, or (ii) 85% of the average closing price of the Company’s common stock for the fifteen trading days prior to the Adjustment Date. Notwithstanding the foregoing, the adjusted Conversion Price may not be less than $0.71, unless the terms of the new adjustment dates are approved by our shareholders, as required pursuant to applicable rules and regulations of NASDAQ.

The Warrants are exercisable and expire on the fifth anniversary thereafter. The Warrants were initially to be exercisable at an exercise price of $3$30.00 per share, provided that the exercise price is subject to anti-dilution protection upon any subsequent transaction at a price lower than the exercise price then in effect. Notwithstanding the foregoing anti-dilution provision, in connection with the $3.5 million offering completed in June 2022, the exercise price was reduced to $5.00. In February 2023, the warrants exercise price was reset to $1.02 in connection with the February 2023 equity financing. The Warrants can be exercised on a cashless basis if there is no effective registration statement registering, or no current prospectus available for, the resale of the ordinary shares underlying the Warrants.

The holders of the Preferred Stock and ~~pay $37,500~~Warrants will not have the right to convert or exercise any portion of ~~cash for services rendered. The consultant will also receive $50,000~~the Preferred Stock and Warrants to the extent that, after giving effect to such conversion, such holder (together with certain related parties) would beneficially own in excess of ~~consideration per year for an additional two years in a combination~~4.99% of ~~cash and~~the Company’s common stock ~~warrants.~~outstanding immediately after giving effect to such conversion or exercise.

~~In April 2021,~~Warrants

As discussed above, the Company ~~completed its IPO and~~has issued ~~2,400,000 shares of~~ common stock ~~for gross cash proceeds~~warrants in connection with its fundraising activities to preference shareholders, its lender and convertible notes issued during the six months ended March 31, 2023. The following table summarizes warrant activity during the six months ended March 31, 2023:

Schedule of warrant activity
	Common Stock Warrants
	Shares		Weighted Average Exercise Price		Weighted average Remaining Life in years
Outstanding at September 30, 2022		6,033,365	$	9.14		4.01
Granted		7,030,441		2.51		5.33
Cancelled		–		–		–
Expired		–		–		–
Exercised		–		–		–
Outstanding at March 31, 2023		13,063,806	$	4.07		4.42
Exercisable at March 31, 2023		13,063,806	$	4.07		4.42

At March 31, 2023, the outstanding and exercisable common stock warrants had an estimated intrinsic value of ~~$14,400,000. See note 9 for further information.~~$140,970.

2020 Stock Plan

In December 2020, the Company adopted the ~~Esports Technologies, Inc.~~ 2020 Stock Plan, or the 2020 Plan. The 2020 Plan is a stock-based compensation plan that provides for discretionary grants of stock options, stock awards, stock unit awards and stock appreciation rights to key employees, non-employee directors and consultants.

Under the 2020 Plan, the aggregate value of all compensation granted or paid to any individual for service as a non-employee director with respect to any calendar year, including awards granted under the 2020 Plan and cash fees paid to such non-employee director, will not exceed $300,000 in total value. For purposes of this limitation, the value of awards is calculated based on the grant date fair value of such awards for financial reporting purposes.

The number of shares of the common stock that may be issued under the 2020 Plan is ~~4,000,000.~~5,000,000. As of March 31, ~~2021,~~2023, the Company had awarded a total ~~3,526,598 shares~~of 2,075,519 share awards under the 2020 Plan, with ~~473,402~~2,924,481 remaining under the 2020 Plan.

Common Stock Awards

The Company has historically awarded restricted units that convert into common stock to various employees, consultants and officers under the 2020 Plan that will vest annually over a period of one to four years from the date of issuance. At March 31, 2023, the Company had 359,125 restricted stock units outstanding. During the six months ended March 31, 2023, 52,250 restricted stock units were converted into shares of common stock.

During the six months ended March 31, ~~2021, the Company agreed to award a total of 1,110,250 restricted stock units that convert into common stock to various employees~~2023 and officers under the 2020 Plan. Of the restricted stock unit awards, 610,250 will vest annually over a period of two to four years, 300,000 will vest upon the completion of various performance goals related to the operations of the Company, and 200,000 shares of common stock underlying awards made to the Company’s CEO will vest equally upon reaching trailing twelve months revenue of $10 million and $20 million. The Company estimated the fair value of the awards at $2 per share based on recent sales of common stock for cash as described above.

In November 2020, the Company entered into four consulting agreements under which the Company issued a total of 683,334 shares of common stock, which vest equally over terms ranging from three to twelve months.

~~During the three and six months ended March 31, 2021,~~2022, the Company recognized a total of ~~$353,313~~$682,925 and ~~$1,438,532~~$2,281,520 of stock-based compensation expense, respectively, related to common stock awards and expects to recognize additional compensation cost of ~~$2,148,636~~$5,105,836 upon vesting of all awards.

~~Warrants~~

As discussed above, the Company has issued common stock warrants in connection with its fundraising activities to brokers, an asset purchase agreement and convertible notes issued during the year ended September 30, 2020. The following table summarizes warrant activity during the three and six months ended March 31, 2021:

Common Stock Warrants
Shares Weighted
Average
Exercise
Price Weighted
average
Remaining
Life in years
Outstanding at September 30, 2020 2,015,000 $ 0.30 4.99
Granted 218,541 1.80 5.00
Cancelled – – –
Expired – – –
Exercised – – –
Outstanding at March 31, 2021 2,233,541 $ 0.45 4.50
Exercisable at March 31, 2021 2,233,541 $ 0.45 4.50

The outstanding and exercisable common stock warrants had an estimated intrinsic value of $5,702,125. The Company estimated the fair value of the warrants using a Black-Scholes option pricing model and the following assumptions: 1) stock price of $2 to $3 per share; 2) dividend yield of 0%; 3) risk-free rate of between 0.18% and 0.52%; 4) expected term of between 2.5 and 5 years; 5) an exercise price of $0.25, $2 or $3 and 6) expected volatility of between 84.1% and 99.0% based on a peer group of public companies. The warrants granted to brokers in connection with sales of common stock during the six months ended March 31, 2021 had an estimated fair value of $247,108 which was reflected as a cost of capital, warrants granted to consultants for services had a fair value of $8,819, and the warrants granted in connection with the asset purchase agreement had an estimated fair value of $57,252.

Options

During the three months ended March 31, 2021, the Company entered into various agreements with employees, consultants and directors whereby the Company agreed to award a total of 402,000 common stock options, including 150,000 to two members of the Board of Directors under the 2020 Plan. These awards vest over a period of six months to four years, with 20,000 options issued to a consultant vesting immediately.

During the three months ended December 31, 2020, the Company entered into various agreements with employees and consultants whereby the Company agreed to award a total of 2,014,348 common stock options, including 90,000 to consultants and 100,000 to a member of the Board of Directors under the 2020 Plan. Of the total, 1,390,000 vest equally over periods of between one and four years, 70,313 vested upon completion of the Company’s IPO, 200,000 to the Company’s Chief Operating Officer would have vested in the event that the Company’s IPO raised gross proceeds of at least $18 million (as the IPO proceeds were less than $18 million, these shares did not vest), 16,785 vest upon the earlier of 1 year or the completion of the Company’s IPO, and 57,250 to the Company’s prior interim CFO vested upon the hiring of the Company’s full time CFO.

The following table summarizes option activity during the six months ended March 31, ~~2021:~~2023:

Common Stock Options
Shares Weighted
Average
Exercise
Price Weighted
average
Remaining
Life in years
Outstanding at September 30, 2020 – $ – –
Granted 2,416,348 0.99 9.23
Cancelled – – –
Expired – – –
Exercised – – –
Outstanding at March 31, 2021 2,416,348 $ 0.99 8.87
Exercisable at March 31, 2021 77,250 $ 0.96 8.71

Schedule of option activity
	Common Stock Options
	Shares			Weighted Average Exercise Price	Weighted average Remaining Life in years
Outstanding at September 30, 2022	1,977,000		$	2.25	7.33
Granted	–			–	–
Cancelled	(781,250	)		1.78	7.06
Expired	–			–	–
Exercised	–			–	–
Outstanding at March 31, 2023	1,195,750		$	2.55	6.69
Exercisable at March 31, 2023	842,500		$	0.70	6.91

During the ~~three and~~ six months ended March 31, ~~2021,~~2023 and 2022, the Company recognized stock-based compensation expense of ~~$337,869~~$197,875 and ~~$574,676~~$968,403, respectively, related to common stock options awarded. The exercisable common stock options had an intrinsic value as of March 31, ~~2021~~2023, of ~~$157,438.~~$99,377. The Company expects to recognize an additional ~~$3,739,510~~$3,654,522 of compensation cost related to stock options expected to vest.

The Company estimated the fair value of the stock options awarded using a Black-Scholes option pricing model and the following assumptions: 1) stock price of $2 to $3 per share; 2) dividend yield of 0%; 3) risk-free rate of between 0.22% and 0.90%; 4) expected term of between 3.5 and 6.25 years; 5) an exercise price of $0.25, $2 or $3 and 6) expected volatility of between 82.3% and 95.33% based on a peer group of public companies.

NOTE 6 – ~~COMMITMENTS AND CONTINGENCIES~~LONG-LIVED ASSETS

OnFixed Assets

The Company’s fixed assets consisted of the following as of March 31, 2023 and September ~~2, 2020,~~30, 2022:

Schedule of fixed assets
	March 31, 2023			September 30, 2022
Software	$	329,127		$	391,851
Furniture and fixtures		525,124			368,432
Total fixed assets		854,251			760,283
Accumulated depreciation		(320,842	)		(213,875	)
Fixed assets, net	$	533,409		$	546,408

Depreciation expense was $85,922 and $401,408 for the six months ended March 31, 2023 and 2022, respectively.

Intangible Assets – Aspire b2C Acquisition

As disclosed in Note 3, the Company ~~entered into a financial advisor agreement with Boustead Securities LLC, the representative~~acquired intangible assets as part of the ~~underwriters in~~Aspire B2C Business acquisition. The acquired intangibles consisted of the ~~Company’s initial public offering, to provide services related to fundraising~~following as of March 31, 2023 and September 30, 2022:

Schedule of intangible assets acquired
	March 31, 2023			September 30, 2022
Trademarks and tradenames, indefinite lives	$	15,877,500		$	14,232,080
Trademarks and tradenames, three year lives		5,089,500			4,562,064
Customer relationships		15,518,625			13,910,396
Total acquired intangibles		36,485,625			32,704,540
Accumulated amortization		(9,226,833	)		(5,169,148	)
Acquired intangible assets, net	$	27,258,792		$	27,535,392

The Karamba trademarks and tradenames represent approximately 75% of the total of the acquired intangibles and have an indefinite useful life. The remaining trademarks and tradenames and customer relationships are amortized over an estimated useful life of three years. Amortization expense on the ~~Company’s planned public listing. The Company agreed~~Aspire intangible assets was $3,330,408 and $2,394,472, respectively, for the six months ended March 31, 2023 and 2022. Amortization for the year ended September 30, 2023, 2024 and 2025 is expected to ~~pay the financial advisor a success fee of 4% of any gross proceeds from any debt financing,~~be approximately $6,752,408, $6,844,000 and a 7% success fee related to any equity or convertible debt financing, subject to customary approval by the regulatory authorities. In April 2021, the Company completed its IPO and issued 2,400,000 shares of common stock for gross cash proceeds of $14,400,000. The Company paid underwriting fees of $820,800 and issued 168,000 warrants to purchase shares of common stock at a price of $7.20 per share for a period of five years.$1,146,666, respectively.

On September 26, 2020, the Company entered into a consulting agreement with a registered foreign broker dealer for fundraising services and paid 10% of any gross proceeds through capital raises from non-US investors introduced by the consultant, up to a maximum payment to the consultant of $200,000 and the consultant also received warrants to purchase shares of the Company’s common stock at an exercise price of $2.00 per share. These warrants were exercised in April 2021 and were converted into 62,386 shares of the Company stock.

NOTE 7 ~~–LOSS~~– COMMITMENTS AND CONTINGENCIES

Financial Advisor’s Claims

The Company’s previous financial advisor, Boustead Securities LLC (“Advisor”) has alleged a breach by the Company over the termination of their engagement and the timing of the payment and amount of the fees owed to the Advisor among other claims (collectively the “Claims”). The fees the Company expects to pay are accrued in the accompanying balance sheet. On June 2, 2022, the Advisor named EBET in an arbitration proceeding with Financial Industry Regulatory Authority (“FINRA”) in connection with the Claims. The statement of claim alleges damages of $5.7 million and seeks a declaration that the Company be required to utilize the Advisor for a certain follow-on offering pursuant to an alleged right of first refusal between the parties. On August 4, 2022, EBET, Inc. counterclaimed against Boustead Securities, LLC for tortious interference with prospective economic advantage and demanded damages and attorneys’ fees in an amount to be determined. The case is ongoing, with a hearing before a 3-arbitrator panel currently scheduled initially for July 2023 now postponed to November 6, 2023. Arbitration is inherently unpredictable. However, the Company believes that it has meritorious defenses to a portion of the alleged fee claim asserted and to the claim that the Company has any obligations pursuant to a right of first refusal between the parties. Nevertheless, cash flows or results of operations could be materially affected in any particular period by the resolution of this matter.

NOTE 8 – LOSS PER COMMON SHARE

The basic net loss per common share is calculated by dividing the Company's net loss available to common shareholders by the weighted average number of common shares during the year. The diluted net loss per common share is calculated by dividing the Company's net loss available to common shareholders by the diluted weighted average number of common shares outstanding during the year. The diluted weighted average number of common shares outstanding is the basic weighted number of common shares adjusted for any potentially dilutive debt or equity. Common shares issuable under convertible debt, stock options and common stock warrants were excluded from the calculation of diluted net loss per share due to their antidilutive effect.

Three Months Ended Six Months Ended
March 31, 2021 March 31, 2020 March 31, 2021 March 31, 2020

Numerator
Net income (loss) $ (2,375,660 ) $ 5,073 $ (5,126,391 ) $ (18,355 )
Denominator
Basic and Diluted weighted average common shares 10,587,654 7,340,421 9,878,185 7,340,421
Basic and diluted net income (loss) per common share $ (0.22 ) $ 0.00 $ (0.52 ) $ (0.00 )

Schedule of earnings per share
	Three Months Ended						Six Months Ended
	March 31, 2023			March 31, 2022			March 31, 2023			March 31, 2022
Numerator:
Net loss	$	(4,011,675	)	$	(11,841,071	)	$	(11,569,440	)	$	(20,722,109	)
Preferred stock dividends		(1,557,576	)		(1,367,260	)		(3,094,545	)		(1,851,077	)
Net loss attributable to common stockholders	$	(5,569,251	)	$	(13,208,331	)	$	(14,663,985	)	$	(22,573,186	)

Denominator:
Basic and diluted weighted average common shares		21,987,679			14,236,755			19,521,263			13,980,720
Basic and diluted net loss per common share	$	(0.25	)	$	(0.93	)	$	(0.75	)	$	(1.61	)

~~NOTE 8 – TRANSACTION WITH RELATED PARTIES~~

As of March 31, 2021, the Company owed $155,228 to Gogawi Inc. (a company controlled by certain initial shareholders of the Company) (see note 1). At September 30, 2020 the amounts owed to these related parties was $152,888. The advances are due on demand and are non-interest bearing. In May 2021, the Company repaid the advances in full.

On November 10, 2020, the Company entered into an employment agreement with Michal Barden, a family member of the Company’s Chief Operating Officer, to serve as the Company’s marketing director. The employment agreement provides for an annual salary of $132,000, a technology allowance of $5,000, and an award of 30,000 shares of common stock in the Company, vesting in four equal annual installments.

~~NOTE 9– SUBSEQUENT EVENTS~~

In April 2021, the Company completed its IPO and issued 2,400,000 shares of common stock for gross cash proceeds of $14,400,000. The Company paid underwriting fees of $820,800 and issued 168,000 warrants to purchase shares of common stock at a price of $7.20 per share for a period of five years.

1425

~~item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~NOTE 9 – TRANSACTION WITH RELATED PARTIES

~~This section~~The Company engaged a firm owned by Matthew Lourie, the Company’s Chief Financial Officer to provide financial reporting services. For the six months ended March 31, 2023 and 2022, the Company incurred consulting fees of ~~this report includes forward-looking statements~~$41,051 and $19,624, respectively.

NOTE 10 –SUBSEQUENT EVENTS

The Company’s outstanding Preferred Stock was initially convertible into Company common stock at an initial conversion price of $28.00 per share (“Conversion Price”). The Preferred Stock provided that ~~reflect~~on April 28, 2023, July 31, 2023, and October 31, 2023 (each an “Adjustment Date”), the Conversion Price was to be adjusted to the lesser of: (i) the Conversion Price in effect on the Adjustment Date, or (ii) 85% of the average closing price of the Company’s common stock for the fifteen trading days prior to the Adjustment Date. Notwithstanding the foregoing, the adjusted Conversion Price may not be less than $0.71, unless the terms of the new adjustment dates are approved by our ~~current views with respect~~shareholders, as required pursuant to ~~future events~~applicable rules and ~~financial performance. Forward looking statements are often identified~~regulations of NASDAQ. The Company did not receive shareholder approval to permit an adjustment of the Conversion Price prior to April 28, 2023. As such, although the adjusted price pursuant to the foregoing provision was less than $0.71 per share, on April 28, 2023, the Conversion Price was adjusted to $0.71 per share. As a result of the preferred stock conversion price reset discussed above, the Company currently does not have sufficient authorized shares to settle its convertible instruments. Subsequent to March 31, 2023, a total of 627 shares of Preferred Stock were converted into 1,061,484 shares of common stock.

On April 27, 2023, the Company was notified by ~~words like, believe, expect, estimate, anticipate, intend, project and similar expressions or words which,~~its gaming platform operator services provider Aspire Global plc (“Aspire”) that the gaming regulatory authority in Germany had sent a letter received by ~~their nature, refer~~Aspire on April 25, 2023 stating that Aspire would be required to ~~future events. You should not place undue certainty on these forward-looking statements, which apply only~~shut down activity of its gaming operations in Germany effective as of 10 days from receipt of said letter until such time as Aspire was otherwise granted a license to operate in Germany. Aspire informed the ~~date~~Company that although it sought an extension of the requested shutdown deadline, it was not successful in receiving an extension of time and/or any form of other relief from this ~~report. These forward-looking statements are~~request. In order to meet the subject ~~to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.~~

~~Overview~~

~~We are a technology company creating and operating platforms focused~~German regulator requirement, Aspire shut down its activities in Germany on esports and competitive gaming. Founded in late 2016, our focus has been operating our primary platform, gogawi.com, which is an online esports/sportsbook focused on gamers located in Asia and Latin America. Although we are focused on esports wagering, we also offer iGaming, which is online casino and table games such as blackjack, virtual sport computer simulated games and slot machines, as well as traditional sports betting in jurisdictions in which we are licensed to do so. We currently hold a gaming sublicense from the Curacao Gaming Authority. Under our existing sublicense, we can accept wagers from residents of more than 149 jurisdictions. Historically, virtually all of our wagers have been sourced in the Philippines.

~~Results of Operations~~

~~Results of operations in dollars~~May 7, 2023 and as a ~~percentage of net~~result the gaming websites owned by the Company that operate in Germany were shut down on that date. During the six months ended March 31, 2023 and 2022 revenue ~~were as follows:~~

Three Months Ended March 31, Six Months Ended March 31,
2021 2020 2021 2020
$ % $ % $ % $ %

Revenue $ 33,834 100% $ 40,750 100% $ 44,628 100% $ 77,878 100%
Cost of revenue 12,465 37% 27,002 66% 24,724 55% 52,167 67%

Gross profit 21,369 63% 13,748 34% 19,904 45% 25,711 33%

Operating expenses:
Sales and marketing 234,691 694% – 0% 273,944 614% – 00%
Product and technology 603,445 1,784% – 0% 1,109,380 2,486% 15,635 20%
General and administrative 1,189,410 3,515% 8,675 21% 2,783,121 6,236% 28,431 37%
Total operating expenses 2,027,546 5,993% 8,675 21% 4,166,445 9,336% 44,066 57%

Loss from operations (2,006,177 ) (5,930)% 5,073 12% (4,146,541 ) (9,291)% (18,355 ) (24)%

Other expenses:
Interest expense (367,214 ) (1,085)% – 0% (967,620 ) (2,168)% – 0%
Foreign currency loss (2,269 ) (7)% – 0% (12,230 ) (27)% – 0%
Total other expense (369,483 ) (1,092)% – 0% (979,850 ) (2,196)% – 0%

Net (loss)/profit $ (2,375,660 ) (7,022)% $ 5,073 12% $ (5,126,391 ) (11,487)% $ (18,355 ) (24)%

generated in German markets was $8,333,414 and $7,935,810, respectively. During the same periods gross profit contributed from the German markets was $2,390,210 and $1,767,313, respectively.

1526

~~Three Months Ended March 31, 2021 compared to March 31, 2020~~

~~Revenue and Gross Profit~~

During the three months ended March 31, 2021, we generated $33,834 in revenue and $21,369 in gross profit. For the three months ended March 31, 2020, we generated $40,750 in revenue and $13,748 in gross profit. The decrease in revenue and gross profit was primarily driven by the disruption to our business stemming from our launching our improved wagering platform, which resulted in less outreach to new and existing customers, thus causing a decrease in revenue for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020. The new platform was launched in beta format in February 2021 and for general release in March 2021.

~~Sales and Marketing Expense~~

Sales and marketing expense was $234,691 for the three months ended March 31, 2021, an increase from zero in the same period in the prior year. This increase was a result of adding marketing staff to prepare for our outreach campaign related to our new wagering products and services and the initial roll out of our marketing campaigns. We expect sales and marketing expenses to increase in future periods as our marketing campaigns increase in both number and volume.

~~Product and Technology Expense~~

Product and technology expense was $603,445 for the three months ended March 31, 2021, as compared to zero for the three months ended March 31, 2020, representing an increase of $603,445, as a result of increased hiring of both employees and consultants focused expanding our product offerings. The three months ended March 31, 2021 included payroll-related costs of $306,536, stock-based compensation of $148,690 and development costs of $148,219.

~~General and Administrative Expense~~

General and administrative expense was $1,189,410 for the three months ended March 31, 2021 as compared to $8,675 for the three months ended March 31, 2020, representing an increase of $1,180,735. The increase in general and administrative expense was mainly attributable to an increase in employee costs from adding new employees, $545,697 of stock-based compensation cost (of which $307,048 was to outside consultants), and professional fees of approximately $230,000 as we prepared for our initial public offering.

~~Interest and Other Expenses~~

During the three months ended March 31, 2021, we recognized interest expense of $367,214, which included amortization of debt discount of $309,822 related to the convertible debt issued to acquire certain intangible assets consisting of acquired domain names. We also incurred a foreign currency loss of $2,269.

~~Net Income/Loss~~

Net loss for the three months ended March 31, 2021 was $2,375,660 compared to a net profit of $5,073 for the three months ended March 31, 2020. The increase in net loss was primarily due to the significant in increase in general and administrative expenses of $1,180,735 described above, an increase in product and technology expenses of $603,445 as a result of our efforts to develop our new products and services, and interest on convertible notes and the loss on extinguishment of convertible notes described above, which totaled $309,822.

~~Six Months Ended March 31, 2021 compared to March 31, 2020~~

~~Revenue and Gross Profit~~

During the six month period ended March 31, 2021, we generated $44,628 in revenue and $19,904 in gross profit. For the six month period ended March 31, 2020, we generated $77,878 in revenue and $25,711 in gross profit. The increase in revenue was primarily driven by the expansion of our existing player base. The slight decrease in gross profit was due to decreased technology platform costs during the six month period ended March 31, 2021. Increased technology platform costs were related to support of our affiliate program in 2021 compared to 2020 along with additional fees incurred from Amazon Web Services.

~~Sales and Marketing Expense~~

Sales and marketing expense was $273,944 for the six months ended March 31, 2021, an increase from zero in the same period in the prior year. This increase was a result of adding marketing staff to prepare for our outreach campaign related to our new wagering products and services and the initial roll out of our marketing campaigns. We expect sales and marketing expenses to increase in future periods as our marketing campaigns increase in both number and volume.

~~Product and Technology Expense~~

Product and technology expense was $1,109,380 for the six months ended March 31, 2021, as compared to $15,635 for the six months ended March 31, 2020, representing an increase of $1,093,745, as a result of increasing development activities of our products and services. The increase in product and technology expense was partially attributable to an increase in stock-based compensation of $251,330.

~~General and Administrative Expense~~

General and administrative expense was $2,783,121 for the six month period ended March 31, 2021 as compared to $28,431 for the six month period ended March 31, 2020, representing an increase of $2,754,690. The increase in general and administrative expense was mainly attributable to an increase in employee costs from adding new employees, $1,762,583 of stock-based compensation cost and professional fees as we prepared for our initial public offering.

~~Interest and Other Expenses~~

During the six month period ended March 31, 2021, we recognized interest expense of $967,620, including amortization of debt discount of $867,593 related to the convertible debt issued to acquire certain intangible assets consisting of acquired domain names.

~~Net Income/Loss~~

Net loss for the six month period ended March 31, 2021 was $5,126,391 compared to a net loss of $18,355 for the six month period ended March 31, 2020. The increase in net loss was primarily due to interest on convertible notes and the loss on extinguishment of convertible notes described above, which totaled $867,593, stock-based compensation of $2,022,026 and an increase in payroll related expenses as we add new employees to support our growth, as described above.

~~Liquidity and Capital Resources~~

On March 31, 2021, we had cash of $2,269,615, and had working capital of $1,820,825. We have historically funded our operations from proceeds from debt and equity sales, and through the use of bitcoin cryptocurrency received from customers.

~~During October and November 2020, we completed a private placement of 2,000,000 shares of our common stock for gross proceeds of $4.0 million.~~

~~During January and February 2021, we completed a private placement of 250,014 shares of our common stock at $3.00 per share for gross proceeds of $0.75 million.~~

As of March 31, 2021, we have incurred an accumulated deficit of $6,575,917 since inception and have not yet generated any meaningful income from operations. In April 2021, we completed our initial public offering and issued 2,400,000 shares of common stock for gross cash proceeds of $14,400,000. We paid underwriting fees of $820,800 and issued 168,000 warrants to purchase shares of common stock at a price of $7.20 per share for a period of five years.

~~Cash used in operating activities~~

Net cash used in operating activities was $1,873,473 for the six months ended March 31, 2021 as compared to cash used in operating activities of $21,563 for the six months ended March 31, 2020. Net cash used in operating activities during the three months ended March 31, 2021 mainly included payments made for employee costs, professional fees to our consultants, attorneys and accountants for services related to completion of our audit, development of our new wagering platform and preparation of our public offering filings.

~~Cash used in investing activities~~

Net cash used in investing activities was $224,669 for the six months ended March 31, 2021 and was related to the purchase of software assets to support the new wagering platform, and the purchase of long term assets related to intellectual property rights.

~~Cash used provided by financing activities~~

Net cash provided by financing activities was $4,367,757 for the six months ended March 31, 2020 and was related to the sale of 2,000,000 shares of common stock at $2.00 per share in a private placement, partially offset by costs of capital to brokers of $351,929 as well as private placements of our common stock completed in January and February 2021, at $3.00 per share for gross proceeds of $750,000.

~~Off Balance Sheet Arrangements~~

~~None.~~

item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This section of this report includes forward-looking statements that reflect our current views with respect to future events and financial performance. Forward looking statements are often identified by words like, believe, expect, estimate, anticipate, intend, project and similar expressions or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or our predictions.

Overview

We operate platforms to provide a real money online gambling experience focused on i-gaming including casino, sportsbook and esports events. The Company operates under a Curacao gaming sublicense and under a strategic partnership with Aspire Global plc (“Aspire”) allowing EBET to provide online betting services to various countries around the world.

Acquisition of Aspire Global Plc’s (“Aspire”) Business to Consumer (“B2C”) Business

In order to accelerate the growth and expand market access for our esports product offerings, on November 29, 2021, we acquired Aspire’s B2C Business, for €65,000,000 payable as follows: (i) a cash amount of €50,000,000; (ii) €10,000,000, payable in accordance with the terms of an unsecured subordinated promissory note; and (iii) 186,838 shares of our common stock, which were valued at €5,000,000.

The acquisition of Aspire’s B2C business provides the following strategic benefits:

	·	ownership of Aspire’s portfolio of B2C proprietary online casino and sportsbook brands consisting of Karamba, Hopa, Griffon Casino, BetTarget, Dansk777, and GenerationVIP;

	·	market access for our esports products in key regulated markets including the United Kingdom, Germany, Ireland, Malta, and Denmark, among others, allowing us to cross-sell esports wagering opportunities;

	·	enhanced strategic partnership with Aspire who provides the on-line gaming platform and a managed services offering, including customer service, customer on-boarding and payment processing ensuring operational stability and continuity.

Our gaming sub-license from the Curacao Gaming Authority and the licenses made available to us from the acquisition of the Aspire B2C business allows us to accept esports and sports wagers from residents of more than 160 jurisdictions.

Focus on I-Gaming Operations

During the quarter ending September 30, 2022, we took significant measures to increase the profitability of our business in the short term. These actions include optimizing the efficiency of marketing campaigns, reducing the total number of employees and contractors by approximately 45 positions, terminating software and other immaterial contracts as well as generally reducing the operating costs of the business. While these efforts focus on the goal of attaining profitability of our business, it is likely to reduce overall revenue growth in the short to medium term. In addition, even after these efforts, we are not currently generating sufficient cash from our operations to settle our debts as they fall due and continue to require near term financing to fund our operations and continue our business. These efforts have also resulted in an increased focus on our i-gaming business and the halting of investment in the Company’s esports products and technologies. As a result of these actions as referenced above, we do not expect to launch our esports products in the foreseeable future.

Recent Developments

On April 27, 2023, the Company was notified by its gaming platform operator services provider Aspire Global plc (“Aspire”) that the gaming regulatory authority in Germany had sent a letter received by Aspire on April 25, 2023 stating that Aspire would be required to shut down activity of its gaming operations in Germany effective as of 10 days from receipt of said letter until such time as Aspire was otherwise granted a license to operate in Germany. Aspire informed the Company that although it sought an extension of the requested shutdown deadline, it was not successful in receiving an extension of time and/or any form of other relief from this request. In order to meet the subject German regulator requirement, Aspire shut down its activities in Germany on May 7, 2023 and as a result the gaming websites owned by the Company that operate in Germany were shut down on that date. During the six months ended March 31, 2023 and 2022 revenue generated in German markets was $8,333,414 and $7,935,810, respectively. During the same periods gross profit contributed from the German markets was $2,390,210 and $1,767,313, respectively.

Results of Operations for the Three Months Ended March 31, 2023, compared to the Three Months Ended March 31, 2022

Results of operations in dollars and as a percentage of net revenue were as follows:

	Three Months Ended March 31,
	2023				2022
		$		%		$		%

Revenue	$	11,580,490		100%	$	19,002,588		100%
Cost of revenue		(6,592,199	)	-57%		(12,009,596	)	-63%

Gross profit		4,988,291		43%		6,992,992		37%

Operating expenses:
Sales and marketing expenses		2,313,235		20%		9,474,087		50%
Product and technology expenses		242,035		2%		1,139,914		6%
Acquisition costs		–		0%		1,190		0%
General and administrative expenses		3,397,469		29%		5,446,776		29%
Total operating expenses		5,952,739		51%		16,061,967		85%

Income (loss) from operations		(964,448	)	-8%		(9,068,975	)	-48%

Other expenses:
Interest expense		(2,688,077	)	-23%		(2,764,819	)	-15%
Loss on derivative instruments		–		0%		(67,031	)	0%
Foreign currency loss and other		(359,150	)	-3%		59,754		-0%
Total other expense		(3,047,227	)	-26%		(2,772,096	)	-15%

Income (loss) before provision for income taxes		(4,011,675	)	-35%		(11,841,071	)	-62%
Provision for income taxes		–		0%		–		0%

Net loss	$	(4,011,675	)	-35%	$	(11,841,071	)	-62%

Revenue

For the three months ended March 31, 2023, we generated $11,580,490 in revenue compared to $19,002,588 in revenue during the three months ended March 31, 2022. The decrease in revenue in the three months ended March 31, 2023, when compared with the same period in the prior year, was driven by a shift in the Company’s focus on higher margin revenue sources. As a result of the Company’s restructuring of the business to improve its immediate profitability, certain inefficient sales and marketing efforts have been curtailed, which may adversely impact revenue growth in the short to medium term.

Cost of Revenue

During the three months ended March 31, 2023, cost of sales was $6,592,199 as compared with $12,009,596 in the same period in the prior year. The decrease in cost of sales is due to the decline on volume of revenue disclosed above. The improvement in gross profit percentage is a result of the Company’s restructuring efforts to reduce costs and increase efficiencies. Cost of revenue consists of third-party costs associated with the betting software platform and gaming taxes.

Sales and Marketing Expense

Sales and marketing expense was $2,313,235 for the three months ended March 31, 2023 compared to $9,474,087 for the three months ended March 31, 2022, a decrease of $7,160,852. As a percentage of revenue sales and marketing expense was 20% in the three months ended March 31, 2023 compared to 50% in the three months ended March 31, 2022. The dramatic improvement is the result of a shift in focus on higher margin revenue sources. Further the decrease in sales and marketing expense is driven by the Company’s efforts to streamline operations and a result of the reduction in headcount over the past year. Sales and marketing expenses also included $153,148 and $964,324 of stock-based compensation costs to employees and consultants for the three months ended March 31, 2023 and 2022, respectively, and payroll costs of $333,434 and $741,860, respectively, for the three months ended March 31, 2023 and 2021, respectively. We expect sales and marketing expenses to increase in future periods as our marketing campaigns increase in both number and volume.

Product and Technology Expense

Product and technology expense was $242,035 for the three months ended March 31, 2023 compared to $1,139,914 for the three months ended March 31, 2022, a decrease of $897,879. The decrease is due to decreased spending related to development of the esports operations that were abandoned in the fourth quarter of fiscal 2022. Product and technology expenses for the three months ended March 31, 2023, included payroll-related costs of $176,619, stock-based compensation of $17,660 and other development costs of $47,756 consisting primarily of consulting and other development costs. Product and technology expenses for the three months ended March 31, 2022, included payroll-related costs of $575,556, stock-based compensation of $367,069 and other development costs of $197,289 consisting primarily of consulting and other development costs.

General and Administrative Expense

General and administrative expense was $3,397,469 for the three months ended March 31, 2023, as compared to $5,446,775 for the same period in the prior year. General and administrative expense for the three months ended March 31, 2023 included amortization of intangible assets of $1,706,960, payroll-related costs of $474,704 and stock-based compensation cost of $206,886. General and administrative expense for the three months ended March 31, 2022 included amortization of intangible assets of $2,394,472, payroll-related costs of $927,162 and stock-based compensation cost of $483,214. The increase in payroll is due to a full quarter of Aspire B2C business related payroll costs.

Interest and Other Expenses

During the three months ended March 31, 2023 and 2022, we recognized interest expense of $2,688,077 and $2,764,819, respectively, which included amortization of debt discounts and deferred finance costs of $1,277,301 and $1,174,539 related to the Senior Notes issued to acquire the Aspire business, and convertible debt issued to acquire certain intangible assets in the previous year. During the three months ended March 31, 2023 and 2022 we also incurred a foreign currency loss of $359,150 and a gain of $59,754, respectively, due to fluctuations in the Euro compared to the US dollar. The Company had a loss on derivatives in the comparable period of $67,031.

Net Income/Loss

Net loss for the three months ended March 31, 2023, was $4,011,675 compared to a net loss of $11,841,071 for the same period in the prior year. The decrease in net loss was primarily due to the decreased operating expenses from the Company’s restructuring efforts in late 2022 and from the lack of acquisition costs in the current period, partially offset by the decline in revenue and gross profit as described above.

Results of Operations for the Six Months Ended March 31, 2023, compared to the Six Months Ended March 31, 2022

Results of operations in dollars and as a percentage of net revenue were as follows:

	Six Months Ended March 31,
	2023				2022
		$		%		$		%

Revenue	$	25,988,454		100%	$	26,142,515		100%
Cost of revenue		(15,110,821	)	-58%		(16,618,683	)	-64%

Gross profit		10,877,633		42%		9,523,832		36%

Operating expenses:
Sales and marketing expenses		6,680,630		26%		13,448,872		51%
Product and technology expenses		536,108		2%		2,155,162		8%
Acquisition costs		–		0%		2,240,147		9%
General and administrative expenses		6,780,262		26%		8,591,195		33%
Total operating expenses		13,997,000		54%		26,435,376		101%

Income (loss) from operations		(3,119,367	)	-12%		(16,911,544	)	-65%

Other expenses:
Interest expense		(5,719,425	)	-22%		(3,741,237	)	-14%
Loss on derivative instruments		(142,187	)	-1%		(73,083	)	0%
Foreign currency loss and other		(2,588,461	)	-10%		3,755	)	-0%
Total other expense		(8,450,073	)	-33%		(3,810,565	)	-15%

Income (loss) before provision for income taxes		(11,569,440	)	-45%		(20,722,109	)	-79%
Provision for income taxes		–		0%		–		0%

Net loss	$	(11,569,440	)	-45%	$	(20,722,109	)	-79%

Revenue

For the six months ended March 31, 2023, we generated $25,988,454 in revenue compared to $26,142,515 in revenue during the six months ended March 31, 2022. The decrease in revenue in the six months ended March 31, 2023, when compared with the same period in the prior year, was driven by the Company’s shift to focus on higher margin revenue sources. The prior period also included only four months of activity since the closing date of the Aspire acquisition on November 29, 2021. As a result of the Company’s restructuring of the business to improve its immediate profitability, certain inefficient sales and marketing efforts will be curtailed, which may adversely impact revenue growth in the short to medium term.

Cost of Revenue

During the six months ended March 31, 2023, cost of sales was $15,110,821 as compared with $16,618,683 in the same period in the prior year. The decrease in cost of sales is due to the decline on volume of revenue disclosed above. The improvement in gross profit percentage is a result of the Company’s restructuring efforts to reduce costs and increase efficiencies.

Sales and Marketing Expense

Sales and marketing expense was $6,680,630 for the six months ended March 31, 2023 compared to $13,448,872 for the six months ended March 31, 2022, a decrease of $6,768,242. As a percentage of revenue sales and marketing expense was 26% in the six months ended March 31, 2023 compared to 51% in the six months ended March 31, 2022. The dramatic improvement is the result of a shift in focus on higher margin revenue sources. The prior period also included only four months of activity since the closing date of the Aspire acquisition on November 29, 2021. Sales and marketing expenses also included $378,712 and $1,842,083 of stock-based compensation costs to employees and consultants (including $1,147,500 to consultants in the prior period) for the six months ended March 31, 2023 and 2022, respectively, and payroll costs of $706,529 and $1,203,753, respectively, for the six months ended March 31, 2023 and 2022, respectively. We expect sales and marketing expenses to increase in future periods as our marketing campaigns increase in both number and volume.

Product and Technology Expense

Product and technology expense was $536,108 for the six months ended March 31, 2023 compared to $2,155,162 for the six months ended March 31, 2022, a decrease of $1,619,054. The decrease is due to decreased spending related to development of the esports operations that were abandoned in the fourth quarter of fiscal 2022 and reduced headcount. Product and technology expenses for the six months ended March 31, 2023, included payroll-related costs of $343,551, stock-based compensation of $61,231 and other development costs of $131,326 consisting primarily of consulting and other development costs. Product and technology expenses for the six months ended March 31, 2022, included payroll-related costs of $1,143,716, stock-based compensation of $696,020 and other development costs of $315,426 consisting primarily of consulting and other development costs.

Acquisition Costs

Acquisition costs were $0 for the six months ended March 31, 2023, as compared to $2,240,147 for the six months ended March 31, 2022. Acquisition costs in the comparable period included a non-cash hedging loss of $1,570,000 from executing a forward contract on the purchase price of the acquisition of the Aspire B2C business to hedge exposure to fluctuations in the Euro. Acquisition costs also included various legal and consultant fees associated with completing the acquisition.

General and Administrative Expense

General and administrative expense was $6,780,262 for the six months ended March 31, 2023, as compared to $8,591,195 for the same period in the prior year. General and administrative expense for the six months ended March 31, 2023 included amortization of intangible assets of $3,330,408, payroll-related costs of $725,263 and stock-based compensation cost of $440,854. General and administrative expense for the six months ended March 31, 2022 included amortization of intangible assets of $2,394,472, payroll-related costs of $1,692,842 and stock-based compensation cost of $711,820. The decline in payroll costs is a result of the Company’s efforts to reduce headcount and streamline operations.

Interest and Other Expenses

During the six months ended March 31, 2023 and 2021, we recognized interest expense of $5,719,425 and $3,741,237, respectively, which included amortization of debt discounts and deferred finance costs of $2,554,317 and $1,702,751 related to the Senior Notes issued to acquire the Aspire business, and convertible debt issued to acquire certain intangible assets in the previous year. During the six months ended March 31, 2023 we also incurred a foreign currency loss of $2,588,461 compared to a gain of $3,755 due to fluctuations in the Euro compared to the US dollar, and a derivative loss of $142,187 compared to a loss of $73,083 in the six months ended March 31, 2022.

Net Income/Loss

Net loss for the six months ended March 31, 2023, was $11,569,440 compared to a net loss of $20,722,109 for the same period in the prior year. The decrease in net loss was primarily due to decreased operating expenses from the lack of acquisition costs in the current period and the Company’s restructuring efforts and reduced headcount, partially offset by the increase in interest expense and foreign currency losses in the current year as described above.

Liquidity and Capital Resources

On March 31, 2023, we had cash and cash equivalents of $3,469,076, and had a working capital deficit of $23,420,927. We have historically funded our operations from proceeds from debt and equity sales, and funds received from customers. Our forecasts for fiscal year 2023 indicate that we will need near term additional funding in order to have sufficient financial resources to satisfy our outstanding debts and to continue to settle our debts as they fall due. On February 6, 2023, we sold 6,372,530 shares of common stock and an equal number of warrants for net proceeds of $5,921,982. We do not have any commitments for additional funding and there is no assurance that we will be able to raise additional financing on favorable terms, if at all.

The following is a summary of borrowings outstanding as at March 31, 2023:


				March 31, 2023
	Contractual Interest		Principal outstanding balance		Principal outstanding balance	Unamortized debt discount		Accrued Interest	Issuance costs		Carrying amount
	rate	Cur	Local		USD	USD		USD	USD		USD
Senior notes	15%	USD	28,016,051		28,016,051	(6,559,060	)	–	(1,875,348	)	19,581,643
Note due to Aspire	10%	EUR	10,000,000		10,875,000	–		1,451,742	–		12,326,742
Convertible notes	10%	USD	681,891		681,891	–		–	–		681,891
Other	0%	USD	675,000		675,000	(141,028	)	–	–		533,972
Total borrowings					40,247,942	(6,700,088	)	1,451,742	(1,875,348	)	33,124,248

Current											20,263,534
Long-term											12,860,714
Total borrowings											33,124,248

As of March 31, 2022, we had not maintained compliance with the covenants of the Senior Notes and obtained a waiver from the Lender which waiver was contingent on the completion an equity raise of at least $3.5 million, which was completed in June 2022. In consideration for obtaining a waiver from the compliance with certain covenants, we agreed to amend the Senior Notes such that $5 million of principal loan balance becomes convertible at $3.58 per share commencing after we raised the $5,000,000 of common equity (including the foregoing $3.5 million). Upon closing of the equity financing on February 6, 2023, the $5,000,000 of principal became convertible at $3.58 per share.

On January 10, 2023, the Company repaid $3,000,000 on the Senior Notes pursuant to a waiver agreement with the Lender. As a result of repayment of the Senior Notes, the minimum cash balance requirement under the Senior Notes is $2,000,000. On January 31, 2023, the Lender provided the Company with a limited waiver of these covenants until February 17, 2023. On February 1, 2023, the Lender provided the Company with a further limited waiver of these covenants until April 28, 2023. On April 28, 2023 the Lender provided the Company with a further limited waiver of these covenants until May 12, 2023. On May 12, 2023, the Lender provided the Company with a further limited waiver of these covenants until May 26, 2023.The Company does not expect to satisfy certain of these covenants prior to May 26, 2023 and is currently in discussions with the Lender on modifying the financial covenants, although there is no assurance that the Company will be successful in making such modifications to the Senior Note.

The accompanying consolidated financial statements have been prepared assuming that we will continue as a going concern. Our continuation as a going concern is dependent upon our ability to obtain equity or debt financings to continue operations. We have a history of and expect to continue to report negative cash flows from operations and a net loss. Our forecasts for 2023 and beyond indicate that we will need additional funding in order to have sufficient financial resources to continue to settle our debts as they fall due. We have taken significant measures to increase the profitability of our business in the short term, but we are not currently generating sufficient cash from our operations to settle our debts as they fall due and continue to require near term financing. These actions include optimizing the efficiency of marketing campaigns, reducing the total number of employees and contractors, terminating software and other immaterial contracts as well as generally reducing the operating costs of the business. These efforts have also resulted in an increased focus on our i-gaming business and a significant reduction in the investment of our esports products and technologies, which resulted in the recognition of an impairment loss on certain intangible assets and fixed assets. As a result of our actions as referenced above, we do not expect to launch our esports products in the short or medium term. These factors raise substantial doubt regarding our ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern. We may seek additional funding through a combination of equity offerings, debt financings, government or other third-party funding, commercialization, marketing and distribution arrangements, other collaborations, strategic alliances and licensing arrangements and delay planned cash outlays or a combination thereof. Management cannot be certain that such events or a combination thereof can be achieved.

As of March 31, 2023, we have incurred an accumulated deficit of $77,491,729 since inception and have not yet generated any meaningful income from operations.

Cash used in operating activities

Net cash used in operating activities was $7,247,321 for the six months ended March 31, 2023, as compared to cash used in operating activities of $7,617,886 for the same period in the prior year. Net cash used in operating activities during the six months ended March 31, 2023, included payments made for employee costs, professional fees to our consultants, attorneys and accountants for services and a reduction of our outstanding accounts payable. Net cash used in operating activities for the six months ended March 31, 2022, and were primarily impacted by the increase in accounts payable. Cash flow from operations were also included payments made for, professional fees to our consultants, attorneys and accountants required to complete the Acquisition.

Cash used in investing activities

Net cash used in investing activities was $11,208 during the six months ended March 31, 2023 related to the purchase of fixed assets. Net cash used in investing activities was $57,131,995 for the six months ended March 31, 2022 and was primarily related to the completion of the Acquisition. Also contributing to the cash used in investing activities in the comparable period were purchase of fixed assets of $902,49 due primarily to opening of our office in Malta and purchase of software assets to support the wagering platform.

Cash used provided by financing activities

Net cash provided by financing activities was $3,895,947 for the six months ended March 31, 2023 due to the cash received from sale of common stock of $5,921,982, proceeds from settlement of derivatives of $973,965 partially offset by the repayment of $3,000,000 on the Senior Notes. Net cash provided by financing activities was $62,736,837 for the six months ended March 31, 2022 and was related to the issuance of Preferred Shares and Senior Notes of $35,606,000 and $27,130,837, respectively.

Off Balance Sheet Arrangements

None.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e)) are designed to ensure that information required to be disclosed by us in reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the appropriate time periods, and that such information is accumulated and communicated to the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely discussions regarding required disclosure. We, under the supervisions of and with the participation of our management, including our Chief Executive Officer, who is our principal executive officer, and Chief Financial Officer, who is our principal financial officer, have evaluated the effectiveness of our disclosure controls and procedures. Based ~~on that~~upon such evaluation, our ~~Chief Executive Officer~~chief executive officer and ~~Chief Financial Officer~~our chief financial officer have concluded that, ~~the design and operation~~as of March 31, 2023, our disclosure controls and procedures were ~~effective as~~ineffective because of ~~March 31, 2021.~~the material weaknesses in our internal control over financial reporting due to a lack of segregation of duties and the lack of formal documentation of our control environment.

In light of the material weakness described above, we continue to perform additional analysis and other post-closing procedures to ensure our financial statements are prepared in accordance with GAAP. Accordingly, we believe that the financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

There were no changes to our internal control over financial reporting during the three months ended March 31, ~~2021,~~2023, that have materially affected, or are reasonable likely to materially effect, our internal controls over financial reporting.

Due to a transition period established by SEC rules applicable to newly public companies, our management is not required to evaluate the effectiveness of our internal control over financial reporting until after the filing of our Annual Report on Form 10-K for the year ended December 31, 2020. As a result, this Quarterly Report on Form 10-Q does not address whether there have been any changes in our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

~~None.~~The Company’s previous financial advisor, Boustead Securities LLC (“Advisor”) has alleged a breach by the Company over the termination of their engagement and the timing of the payment and amount of the fees owed to the Advisor (collectively the “Claims”). The fees the Company expects to pay are accrued in the accompanying balance sheet. On June 2, 2022, the Advisor named EBET in an arbitration proceeding with Financial Industry Regulatory Authority (“FINRA”) in connection with the Claims. The statement of claim alleges damages of $5.7 million and seeks a declaration that the Company be required to utilize the Advisor for a certain follow-on offering pursuant to an alleged right of first refusal between the parties. Arbitration is inherently unpredictable. However, the Company believes that it has meritorious defenses to a portion of the alleged fee claim asserted and to the claim that the Company has any obligations pursuant to a right of first refusal between the parties. Nevertheless, cash flows or results of operations could be materially affected in any particular period by the resolution of this matter.

On September 15, 2022, the Company filed a Complaint in the United States District Court for the District of Nevada against its former CTO Jason Finch for: (1) Breach of Contract; (2) Violation of Nevada Revised Statutes section 205.511; (3) Conversion; and (4) Misappropriation of Trade Secrets. In the subject matter, we seek injunctive relief and demand damages and attorneys’ fees in an amount to be determined. In reply to our Complaint, Mr. Finch filed a Motion to Dismiss the matter and such motion is currently pending decision before the court.

Other than as described above, we are not at this time involved in any additional legal proceedings that we believe could have a material effect on our business, financial condition, results of operations or cash flows.

Item 1A. Risk Factors

For a discussion of potential risks or uncertainties, see “Risk Factors” in the Company’s ~~registration statement~~most recent annual report on Form ~~S-1, as amended (File No. 333-254068),~~10-K on file with the SEC. Except as set forth below, there have been no material changes to the risk factors disclosed in such ~~registration statement.~~annual report.

~~An active trading market for our common stock may not be sustained.~~

Although our common stock is traded on Nasdaq under the symbol “EBET,” there is a very limited trading history and an active trading market for our common stock may not be sustained. Accordingly, no assurance can be given as to the following:

· ~~the likelihood that an active trading market for our common stock will be sustained;~~

· ~~the liquidity of any such market;~~

· ~~the ability of our stockholders to sell their shares of common stock; or~~

· ~~the price that our stockholders may obtain for their common stock.~~

If an active market for our common stock with meaningful trading volume is not maintained, the market price of our common stock may decline materially. Consequently, you may not be able to sell our common stock at prices equal to or greater than the price you paid.

Future sales of shares by ~~existing~~our preferred stockholders could cause our stock price to decline.

IfOn November 29, 2021, in connection with the Acquisition, we issued an aggregate of 37,700 shares of Preferred Stock for a purchase price of $1,000.00 per share, for aggregate gross proceeds of $37,700,000 (the “Private Placement”). The Preferred Stock was initially convertible into common stock at an initial conversion price of $28.00 per share (“Conversion Price”); provided that the Conversion Price is subject to anti-dilution protection upon any subsequent transaction at a price lower than the Conversion Price then in effect. In addition, on April 28, 2023, July 31, 2023 and October 31, 2023 (each, an “Adjustment Date”), the Conversion Price shall be adjusted to the lesser of: (i) the Conversion Price in effect on the Adjustment Date, or (ii) 85% of the average closing price of the Company’s common stock for the fifteen trading days prior to the Adjustment Date. Notwithstanding the foregoing, the adjusted Conversion Price may not be less than $0.71, unless the terms of the new adjustment dates are approved by our ~~existing stockholders, which acquired their~~shareholders, as required pursuant to applicable rules and regulations of NASDAQ. We agreed to submit for a vote the approval the terms of the new adjustment dates at our next meeting of shareholders and use our reasonable best efforts to solicit our shareholders’ approval of such vote. We did not receive shareholder approval to permit an adjustment of the Conversion Price prior to April 28, 2023. As such, although the adjusted price pursuant to the foregoing provision was less than $0.71 per share, on April 28, 2023, the Conversion Price was adjusted to $0.71 per share. Subsequent to March 31, 2023, a total of 627 shares of Preferred Stock were converted into 1,061,484 shares of common stock. Accordingly, as of the date hereof, there are 62,763,263 shares of common stock at prices substantially below our current trading price, sell, or indicate an intention to sell, substantial amounts of our common stock in the public market after the contractual lock-up agreements described below expire and other restrictions on resale lapse, the trading price of our common stock could be adversely impacted.

Certain of our initial stockholders holding an aggregate of 4,428,106 shares and our officers and directors, have agreed not to offer, sell, dispose of or hedge such shares of our common stock, subject to specified limited exceptions, during the period continuing through the date that is fifteen months after the date of our IPO, or July 15, 2022. In addition, certain of our pre-IPO stockholders holding an aggregate of 683,334 shares have agreed not to offer, sell, dispose of or hedge such shares of our common stock, subject to specified limited exceptions, during the period continuing through the date that is six months after the date of our IPO, or October 15, 2021. Finally, holders of an aggregate of 2,250,014 shares of common stock have agreed not to offer, sell, dispose of or hedge such shares of our common stock, subject to specified limited exceptions, during the period continuing through the date that is 180 days after the date of our IPO, or October 12, 2021; provided if our common stock price is over $11.00 the lock-up on these shares will end on July 14, 2021. Upon the expirationissuable upon conversion of the lock-up agreements, all such shares will be eligible for resale in the public market, subject to applicable securities laws, including the Securities Act. Upon expiration of each of these lock-up periods or upon the ability to sell shares pursuant to Rule 144, thePreferred Stock. The trading price of our common stock could be adversely impacted if these preferred stockholders sell, or ~~indicate an intention to~~if the market believes such holders may sell, substantial amounts of our common stock in the public market. As a result of the preferred stock conversion price reset discussed above, the Company currently does not have sufficient authorized shares to settle its convertible instruments.

We are party to a Credit Agreement which contains restrictive covenants, and if we are unable to comply with these covenants then upon notice of an event of default and/or event of material adverse effect to lender, the lender could declare a default of the Credit Agreement wherein we would be required to immediately repay the amounts due under the Credit Agreement.

On November 29, 2021, we entered into a Credit Agreement with CP BF Lending, LLC (“Lender”) to finance the acquisition of the Aspire assets that we purchased on the same date, via a term loan in the maximum principal amount of $30.0 million with a maturity of 36 months. The Credit Agreement imposes various restrictions and contains customary affirmative and restrictive covenants, including, without limitation, certain reporting obligations and certain limitations on restricted payments; and limitations on liens, encumbrances and indebtedness. In addition, borrowings under the Credit Agreement are secured by a first priority lien on our assets. If we fail to comply with the covenants or payments specified in the Credit Agreement, the Lender could declare an event of default, which would give it the right to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable. In addition, since the borrowings under the Credit Agreement are secured by a first priority lien on our assets, upon such an event of default, the Lender may foreclose on our assets. The amount of our outstanding indebtedness could have an adverse effect on our operations and liquidity, including by, among other things: (i) making it more difficult for us to pay or refinance our debts as they become due during adverse economic and industry conditions, because we may not have sufficient cash flows to make our scheduled debt payments; (ii) causing us to use a larger portion of our cash flows to fund interest and principal payments, thereby reducing the availability of cash to fund working capital, capital expenditures and other business activities; (iii) making it more difficult for us to take advantage of significant business opportunities, such as acquisition opportunities or other strategic transactions, and to react to changes in market or industry conditions; and (iv) limiting our ability to borrow additional monies in the future to fund the activities and expenditures described above and for other general corporate purposes as and when needed, which could force us to suspend, delay or curtail business prospects, strategies or operations. To date, the Company has entered into a series of a total of 16 waiver agreements with the Lender providing for the limited waivers of default as to specific financial and other covenants. The waivers were provided under certain terms and conditions and sometimes included fees accrued to the principal balance amount due Lender under the Credit Agreement, and required the Company to repay $3,000,000 in principal on January 10, 2023. These waivers will expire on May 26, 2023. We do not expect to satisfy the financial covenants that are subject to the current waiver prior to May 26, 2023 and are currently in discussions with the Lender on modifying the financial covenants which are the subject of the waiver. There is no assurance that the Company will be successful in making such modifications to the Credit Agreement and as such, no assurance that the Company will not default certain covenants existing in the Credit Agreement.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~On April 19, 2021, we closed our initial public offering~~There were no sales of ~~2,400,000 shares of common~~ ~~at a price to~~equity securities during the public of $6.00 per share. The gross proceeds from our initial public offering, before deducting underwriting discounts and commissions, was $14.4 million. The offer and sale of all of the shares in the offeringperiod covered by this Quarterly Report that were not registered under the Securities Act ~~pursuant to~~and were not previously reported on a ~~registration statement~~Current Report on Form ~~S-1 (File No. 333-254068), which was declared effective~~8-K filed by the ~~SEC on April 14, 2021. Boustead Securities, LLC acted as underwriter for the offering.~~Company.

~~There has been no material change in the planned use~~In May 2023, a total of ~~proceeds from our IPO as described in our final prospectus filed with the SEC on April 16, 2021 pursuant to Rule 424(b). No direct or indirect payments~~627 shares of Preferred Stock were ~~made~~converted into 1,061,484 shares of common stock by ~~us to any~~three holders of our ~~directors or officers or their associates, to persons owning ten percent or more~~Preferred Stock at a conversion price of ~~our~~$0.71 per share. The holders are “accredited investors” (as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”)), and the shares of Preferred Stock and common stock ~~or to their associates, or to our affiliates, other than payments~~were issued in ~~the ordinary course of business to officers for salaries. Pending the uses described, we intend to invest the net proceeds~~reliance upon an exemption from registration contained in ~~short-term, interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations~~Section 4(a)(2) of the ~~U.S. government.~~Securities Act.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosure

Not Applicable.

Item 5. Other Information

~~There is no other information required to be disclosed under this item which was not previously disclosed.~~None.

Item 6. ~~Exhibits.~~Exhibits

Exhibit Number		Description

31.1*4.1		Form of Common Warrant issued in February 2023 offering (incorporated by reference to exhibit 4.1 of the Form 8-K filed February 2, 2023)
10.1		Form of Securities Purchase Agreement from February 2023 offering (incorporated by reference to exhibit 10.1 of the Form 8-K filed February 2, 2023)
10.2		Placement Agent Agreement between the Company and WestPark Capital, Inc. (incorporated by reference to exhibit 10.2 of the Form 8-K filed February 2, 2023)
31.1*		Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934
31.2*		Certification of the Principal Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934
32.1*(1)		Certification of the Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*(1)		Certification of the Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.INS*101.SCH		~~XBRL Instance Document~~
101.SCH*		Inline XBRL Taxonomy Extension Schema Document
101.CAL*101.CAL		~~SXRL~~Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted in IXBRL, and included in exhibit 101).

____________________

*	Filed herewith.

*(1)	~~Filed herewith.~~
**	~~Management contract or compensatory plan, contract or arrangement.~~

~~(1)~~

The certifications on Exhibit 32 hereto are deemed not “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. Such certifications will not be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

2037

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, there unto duly authorized.

	~~ESPORTS TECHNOLOGIES,~~EBET, INC.

Date: May ~~17, 2021~~12, 2023	By:	/s/ Aaron Speach
		Aaron Speach Chief Executive Officer, President and Director (Principal Executive Officer)


~~Date:~~Date May ~~17, 2021~~12, 2023	By:	/s/ ~~James Purcell~~Matthew Lourie
		~~James Purcell~~Matthew Lourie Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

2138

~~720 South 7th Street, 3rd Floor,~~ 3960 Howard Hughes Parkway, Suite 500, Las Vegas, NV		~~89101~~89169
(Address of Principal Executive Offices)		(Zip Code)

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	EBET	The NASDAQ Stock Market LLC

Large Accelerated Filer ☐	Accelerated Filer ☐
Non-Accelerated Filer ☒	Smaller Reporting Company ☒
	Emerging Growth Company ☒


	March 31,			September 30,			March 31,			September 30,
	2021			2020			2023			2022

ASSETS
Current assets:
Cash	$	2,269,615		$	–		$	3,469,076		$	5,486,210
Accounts receivable, net		–			33,839			1,800,306			1,647,345
Deferred financing costs		125,900			50,000
Other current assets		37,294			–
Prepaid expenses		53,926			–
Prepaid expenses and other current assets								1,135,522			1,772,332
Derivative asset								–			1,116,153
Right of use asset, operating lease, current portion								65,220			129,975

Total current assets		2,486,735			83,839			6,470,124			10,152,015

Long term assets:
Software and equipment, net		135,805			–
Intangible assets - cryptocurrency		8,781			44,562
Intangible assets - domain names, net		2,239,606			2,239,606
Other long-term assets		133,770			–

Fixed assets, net								533,409			546,408
Intangible assets, net								27,263,092			27,545,329
Goodwill								34,201,875			30,657,460

Total assets	$	5,004,697		$	2,368,007		$	68,468,500		$	68,901,212

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	468,832		$	55,760		$	8,541,479		$	13,384,906
Accounts payable, related party		155,228			152,888
Current lease liabilities								79,720			129,974
Borrowings, current portion								20,263,534			21,202,585
Liabilities to users		41,850			8,809			1,006,318			1,272,308
Total current liabilities		665,910			217,457			29,891,051			35,989,773

Convertible notes payable, net of discount		776,489			116,667
Other long term liabilities, net of discount		442,680			422,409
Long-term liabilities
Borrowings, net of current portion								12,860,714			11,145,863

Total liabilities		1,885,079			756,533			42,751,765			47,135,636

COMMITMENTS AND CONTINGENCIES								–			–

Stockholders' equity:
Preferred Stock, $0.001 par value, 10,000,000 shares authorized, 0 issued and outstanding		–			–
Common stock; $0.001 par value, 100,000,000 shares authorized, 10,648,769 and 7,340,421 shares issued and outstanding as of March 31, 2021 and September 30, 2020, respectively		10,649			7,340
Preferred Stock, $0.001 par value, 10,000,000 shares authorized, 37,700 issued and outstanding as of March 31, 2023 and September 30, 2022, respectively								38			38
Common stock; $0.001 par value, 100,000,000 shares authorized 25,144,675 and 16,654,573 shares issued and outstanding as of March 31, 2023 and September 30, 2022, respectively								25,144			16,654
Additional paid-in capital		9,684,886			3,053,660			102,863,255			91,941,757
Accumulated other comprehensive income (loss)								320,027			(7,365,129	)
Accumulated deficit		(6,575,917	)		(1,449,526	)		(77,491,729	)		(62,827,744	)
Total stockholders’ equity		3,119,618			1,611,474			25,716,735			21,765,576

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	5,004,697		$	2,368,007		$	68,468,500		$	68,901,212


							For the Six Months Ended March 31,
	For the Six Months Ended March 31,						2023			2022
	2021			2020
Cash flow from operating activities:
Net loss	$	(5,126,391	)	$	(18,355	)	$	(11,569,440	)	$	(20,722,109	)

Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of debt discount		867,593			–
Depreciation expense		12,346			–
Amortization of debt discount, issuance costs								2,554,317			1,368,188
Amortization of right of use assets								77,300			–
Depreciation and amortization expense								3,416,330			2,795,880
Stock-based compensation		2,022,026			–			880,800			3,249,923
Bad debt expense		50,932			–
Gain on cryptocurrency settlement		(35,140	)		(2,428	)
Derivative loss								142,187			73,083
Foreign exchange gain (loss)								2,588,458			(216,678	)
Changes in operating assets and liabilities:
Accounts receivable		(35,251	)		(76,755	)		34,400			(1,711,122	)
Prepaid expenses		(53,926	)		–
Prepaid expenses and other								784,200			(717,505	)
Accounts payable and accrued liabilities		502,268			73,192			(5,695,950	)		7,301,761
Accounts payable - related parties		2,340			–
Other assets		(37,294	)		–
Deferred revenue		(75,900	)		–
Current lease liabilities								(63,251	)		–
Liabilities to users		32,924			2,783			(396,672	)		960,693
Net cash used in operating activities		(1,873,473	)		(21,563	)		(7,247,321	)		(7,617,886	)

Cash flow from investing activities:
Purchase of software and equipment		(90,899	)		–
Purchase of other long term assets		(133,770	)		–
Purchase of fixed assets								(11,208	)		(902,469	)
Cash paid for business combinations								–			(56,229,526	)
Net cash used by investing activities		(224,669	)		–			(11,208	)		(57,131,995	)

Cash flow from financing activities:
Proceeds from equity issuance, net of costs of capital		4,367,757			–
Proceeds from settlement of derivative instruments								973,965			–
Repayment of senior note								(3,000,000	)		–
Proceeds from debt issuance, net of issuance costs								–			27,130,837
Proceeds from equity issuance, net of issuance costs								5,921,982			35,606,000
Net cash provided by financing activities		4,367,757			–			3,895,947			62,736,837

Effect of foreign exchange rates on cash								1,345,448			–

NET CHANGE IN CASH		2,269,615			(21,563	)		(2,017,134	)		(2,013,044	)
CASH AT BEGINNING OF PERIOD		–			67,717			5,486,210			9,064,859
CASH AT END OF PERIOD	$	2,269,615		$	46,154		$	3,469,076		$	7,051,815

Supplemental disclosure of cash flow information:
Cash paid for interest	$	–		$	–		$	2,017,134		$	1,427,915
Cash paid for income taxes	$	–		$	–

Non-cash transactions
Stock warrant issued for asset acquisition	$	19,179		$	–
Stock issued for conversion of notes payable	$	187,500		$	–
Preferred share dividends							$	3,094,545		$	1,851,077
Stock warrants issued in connection with Senior Notes							$	–		$	7,661,382
Shares issued for conversion of debt and accrued interest							$	1,032,661		$	112,500

	·	our ability to successfully integrate our asset acquisitions;

	·	our ability to operate under the gaming licenses of third-party entities;

	·	our ability to introduce new enhancements to our website on the timeline we have indicated;

	·
	·	our ability to obtain additional funding to develop additional services and ~~offerings;~~offerings and to service our debt obligations;

	·
	·	our ability to achieve and maintain compliance with the covenants in our debt obligations or to obtain additional waivers until we are able to do so;

	·	compliance with obligations under intellectual property licenses with third parties;

	·
	·	competition from existing online offerings or new offerings that may emerge;

	·
	·	our ability to establish or maintain collaborations, licensing or other arrangements;

	·
	·	our ability and third parties’ abilities to protect intellectual property rights;

	·
	·	our ability to attract and retain key personnel to manage our business effectively.

				Page
PART I.	FINANCIAL INFORMATION

	Item 1.	Unaudited Financial Statements		4

		a)	Consolidated Balance Sheets as of March 31, 2023 and September 30, 2022	4
		b)	Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2023 and 2022	5
		c)	Consolidated Statements of Changes in Shareholders’ Equity for the Six Months Ended March 31, 2023 and 2022	6
		d)	Consolidated Statements Cash Flows for the Six Months Ended March 31, 2023 and 2022	7
		e)	Notes to Consolidated Financial Statements	8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		27

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		34

	Item 4.	Controls and Procedures		34

PART II.	OTHER INFORMATION

	Item 1.	~~Financial Statements~~

		a)	~~Balance Sheets as of March 31, 2021 and September 30, 2020~~		4
		b)	~~Statements of Operations for the Three and Six Months Ended March 31, 2021 and 2020~~		5
		c)	~~Statements of Stockholders’ Equity for the Three and Six Months Ended March 31, 2021 and 2020~~		6
		e)	~~Cash Flows Statements for the Three and Six Months Ended March 31, 2021 and 2020~~		7
		f)	~~Notes to Financial Statements~~		8

	~~Item 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~			15

	~~Item 3.~~	~~Quantitative and Qualitative Disclosures About Market Risk~~			18

	~~Item 4.~~	~~Controls and Procedures~~			18

~~PART II.~~	~~OTHER INFORMATION~~

	~~Item 1.~~	Legal Proceedings			18

	~~Item 1A.~~	~~Risk Factors~~			18

	~~Item 2.~~	~~Unregistered Sales of Equity Securities and Use of Proceeds~~			19	35

	Item 3.1A.	~~Defaults Upon Senior Securities~~Risk Factors		19	35

	Item 4.2.	~~Mine Safety Disclosure~~Unregistered Sales of Equity Securities and Use of Proceeds		1936

	Item 3.	Defaults Upon Senior Securities		36

	Item 4.	Mine Safety Disclosure		36

	Item 5.	Other Information		20	36

	Item 6.	Exhibits		20	37

~~SIGNATURE~~SIGNATURES				21
						38

	Common stock				Additional
	Number of				paid-in		Accumulated
	Shares		Amount		capital		deficit			Total


Balance at September 30, 2019		7,340,421	$	7,340	$	953,660	$	(876,271	)	$	84,729

Net loss		–		–		–		(23,429	)		(23,429	)

Balance at December 31, 2019		7,340,421		7,340		953,660		(899,700	)		61,300

Net income		–		–		–		5,073			5,073

Balance at March 31, 2020		7,340,421	$	7,340	$	953,660	$	(894,627	)	$	66,373



Balance at September 30, 2020		7,340,421	$	7,340	$	3,053,660	$	(1,449,526	)	$	1,611,474

Shares issued for cash, net		2,000,000		2,000		3,646,071		–			3,648,071

Stock-based compensation		683,334		683		1,321,343		–			1,322,026

Shares issued due to conversion of notes payable		375,000		375		187,125		–			187,500

Stock warrants issued for asset acquisition		–		–		57,252		–			57,252

Net loss		–		–		–		(2,750,731	)		(2,750,731	)

Balance at December 31, 2020		10,398,755		10,398		8,265,451		(4,200,257	)		4,075,592

Shares and warrants issued for cash, net		250,014		251		719,435		–			719,686

Stock-based compensation		–		–		700,000		–			700,000

Net loss		–		–		–		(2,375,660	)		(2,375,660	)

Balance at March 31, 2021		10,648,769	$	10,649	$	9,684,886	$	(6,575,917	)	$	3,119,618


	Preferred stock			Common Stock							Accumulated
	Number of			Number of				Additional paid-in			Other Comprehensive			Accumulated
	Shares		Amount	Shares		Amount		capital			income (loss)			deficit			Total

Balance at September 30, 2021	–	$	–	13,315,414	$	13,315	$	26,834,354		$	53,911		$	(16,649,550	)	$	10,252,030
Shares & warrants issued for cash, net	37,700		38	–		–		37,699,962			–			–			37,700,000
Shares issued to Aspire Global plc	–		–	186,838		187		13,326,565			–			–			13,326,752
Cashless exercise of warrants	–		–	244,346		244		(244	)		–			–			–
Shares issued for conversion of debt	–		–	423,141		423		112,077			–			–			112,500
Exercise of stock options for cash	–		–	2,000		2		5,998			–			–			6,000
Stock-based compensation	–		–	20,000		20		1,435,296			–			–			1,435,316
Preferred share dividends	484		–	–		–		483,817						(483,817	)		–
Issuance costs	–		–	–		–		(2,100,000	)		–			–			(2,100,000	)
Net loss	–		–	–		–		–			–			(8,881,038	)		(8,881,038	)
Comprehensive income	–		–	–		–		–			187,428			–			187,428
Balance at December 31, 2021	38,184		38	14,191,739		14,191	$	77,797,825			241,339			(26,014,405	)		52,038,988

Cashless exercise of warrants and RSU	–		–	225,091		225		(225	)		–			–			–
Stock-based compensation	–		–	–		–		1,814,607			–			–			1,814,607
Preferred share dividends	1,367		2	–		–		1,367,258			–			(1,367,260	)		–
Net loss	–		–	–		–		–			–			(11,841,071	)		(11,841,071	)
Comprehensive loss	–		–	–		–		–			(1,156,825	)		–			(1,156,825	)
Balance at March 31, 2022	39,551	$	40	14,416,830	$	14,416	$	80,979,465		$	(915,486	)	$	(39,222,736	)	$	40,855,699

Balance at September 30, 2022	37,700	$	38	16,654,573	$	16,654	$	91,941,757		$	(7,365,129	)	$	(62,827,744	)	$	21,765,576
Stock-based compensation	–		–	20,750		21		503,084			–			–			503,105
Shares issued for conversion of debt	–		–	600,000		600		299,400			–			–			300,000
Preferred share dividends	–		–	–		–		1,536,969			–			(1,536,969	)		–
Net loss	–		–	–		–		–			–			(7,557,765	)		(7,557,765
Comprehensive income	–		–	–		–		–			6,356,110			–			6,356,110
Balance at December 31, 2022	37,700		38	17,275,323		17,275		94,281,210			(1,009,019	)		(71,922,478	)		21,367,026

Common stock issued for cash	–		–	6,372,530		6,373		5,915,609			–			–			5,921,982
Stock-based compensation	–		–	31,500		31		377,664			–			–			377,695
Shares issued for conversion of debt	–		–	1,465,322		1,465		731,196			–			–			732,661
Preferred share dividends	–		–	–		–		1,557,576			–			(1,557,576	)		–
Net loss	–		–	–		–		–			–			(4,011,675	)		(4,011,675	)
Comprehensive income	–		–	–		–		–			1,329,046			–			1,329,046

Balance at March 31, 2023	37,700	$	38	25,144,675	$	25,145	$	102,863,225		$	320,027		$	(77,491,729	)	$	25,716,735

Schedule of lease-related assets and liabilities
	March 31, 2023		September 30, 2022
Operating Leases:
Operating lease right-of-use assets	$	65,220	$	129,975
Right of use liability operating lease current portion		79,720		129,974
Right of use liability operating lease long term		–		–
Total operating lease liabilities	$	79,720	$	129,974

Schedule of maturities of lease liabilities
	Operating
	Leases
2023 (6 months remaining)	$	82,411
2023		–
2024		–
2025		–
2026 and thereafter		–
Total future undiscounted lease payments		82,411
Less: Interest		(2,691	)
Present value of lease liabilities	$	79,720

		March 31, 2021			September 30, 2020
Software	$	148,151		$	–
Total software and equipment		148,151			–
Accumulated depreciation		(12,346	)		–
Software and equipment, net	$	135,805		$	–

Cryptocurrency at September 30, 2020	$	44,562
Additions of cryptocurrency		18,276
Payments of cryptocurrency		(89,197	)
Gain on cryptocurrency		35,140
Cryptocurrency at March 31, 2021	$	8,781