Newgioco Group, Inc. (“Newgioco” or the “Company”) (Nasdaq: NWGI), a global sports betting and interactive gaming technology company providing a cutting-edge fully integrated, omni-channel sports betting technology, is pleased to provide a corporate update to shareholders and investors.
Completion of $10 Million Follow-on Offering
During the first 6 months of fiscal 2020, the Company filed its Registration Statement (333-233768) on Form S-1, that was declared effective by the Securities and Exchange Commission on August 12, 2020. As previously announced, the Company successfully closed on the $10 million offering on August 17, 2020.
Use of Proceeds and Future Plans
Elimination of Debt
On August 20 and 21, 2020, the Company re-paid a total of $1,495,395 and CDN$1,388,088, which includes principal and accrued interest paid in full to the payment date. The Company has approximately $484,795 and CDN$394,479 that includes principal and accrued interest remaining, and which it expects to pay out by September 28, 2020. The Company currently has a strong balance with net cash and cash equivalents of approximately $10 million and no significant debt remaining.
U.S. Expansion Plans
As previously announced, the Company established a Delaware subsidiary named Elys Gameboard Technologies, LLC and has engaged U.S. gaming counsel to commence licensing on a state by state basis for U.S. operations. The Company intends to use remaining proceeds to continue to develop and execute on our U.S. market expansion.
The Company has also completed the design, coding and testing of its all new “Americanized” platform for providing sports betting solutions to gaming operators throughout the U.S.A. The Company’s new Elys U.S. platform differs functionally from its European sports book by offering seamless integration of all U.S. sports events including the ability to integrate specialized feeds providing highly competitive odds on college sports events as well as in-game betting on all channels including land-based POS, self-serving betting kiosks and mobile or tablet. The Company’s reconfigured Elys U.S. offers a simplified, easy to use customer interface to facilitate rapid betting while maintaining the integrity of Elys’ innovative bet risk management system and modular architecture.
The Company previously reported that it has commenced the Gaming Laboratories International (“GLI”) certification of its Elys Gameboard sports betting technology on July 15, 2020. The Company plans to certify all components of Elys, including GLI-33 for point-of-sale (POS) betting within the coming days, followed by GLI-20 for the kiosk and the mobile/tablet component shortly thereafter. The full GLI certification on all components should allow Newgioco to operate Elys in virtual every corner of the United States.
Summary of Quarter report for the period ended June 30, 2020
During Q2, Newgioco reported year over year decrease in turnover (betting handle) by about 5.3% to approximately $94.1 million from approximately $99.3 million for the three months ended June 30, 2020 and 2019 respectively and by about 11.1% to approximately $210.0 million from approximately $236.2 million for the six months ended June 30, 2020 and 2019 respectively. The result of lower turnover was a decrease in revenue of about 47.3% to approximately $4.8 million from approximately $9.1 million for the three months ended June 30, 2020 and 2019, respectively, and by about 18.5% to approximately $15.0 million from approximately $18.4 million for the six months ended June 30, 2020 and 2019, respectively. Turnover and revenue was directly impacted by the temporary shutdown of physical locations and suspension of sporting events due to the global COVID-19 crisis.
Commensurate with the decrease in turnover and revenue, the Company’s selling expenses decreased by about 36.5% to approximately $4.0 million from approximately $6.3 million for the three months ended June 30, 2020 and 2019, respectively, and by about 25.6% to approximately $10.2 million from approximately $13.7 million for the six months ended June 30, 2020 and 2019, respectively. The reduction in selling expenses had a normalizing effect on trading results. The Company also saw a reduction in overall expenses to approximately $6.8 million from approximately $9.6 million for the three months ended June 30, 2020 and 2019, respectively, and to approximately $15.9 million from approximately $20.2 million for the six months ended June 30, 2020 and 2019, respectively. Net Loss increased by about 42% to approximately $2.5 million from approximately $1.8 million for the three months ended June 30, 2020 and 2019, respectively which was primarily due to a one-time non-cash expense on the issuance of warrants to debenture holders that extended the maturity date of their debentures and the expenses associated with preparation of the Company’s public offering that was closed on August 17, 2020, while the net loss for the six months ended June 30, 2020 and 2019, respectively was reduced by 51.6% to approximately $2.4 million from approximately $4.9 million due to disciplined cost containment measures employed by management.
“The first six months of 2020 presented considerable and surprising challenges being that our foundational market in Italy was one of the first nations in the world hit with the COVID-19 crisis,” stated Michele (Mike) Ciavarella, CEO Newgioco Group. “Despite the severe economic impact caused by the COVID-19 to our customers, the suspension of all sports events as well as the temporary closure of all of our land-based distribution in Italy for more than two-thirds of the second quarter, Newgioco performed exceptionally well compared to our industry peer group. We experienced an overall short-term and sustainable operating loss of about $2 million compared to about $0.5 million last year on a three-month year over year basis, however, we also managed an overall year over year improvement in operating loss on a six month bases of about $0.9 million in 2020 compared to about $1.9 million in 2019. These deflections were well within our cash maintenance range and the Company did not require emergency relief beyond government provided employment benefits. The recent offering transaction immediately strengthened our balance sheet and should provide us readily available resources to execute on our near-term go-to-market strategy in the U.S. which we plan to commence in 2020.
“Elys’ modular architecture, that was design-built in the challenging regulated Italian market, is the ideal solution for U.S. casino and franchise operators such as restaurant and c-store chains that own multiple locations and that wish to offer sports betting throughout their network while controlling the bet risk from a centralized dashboard,” continued Mr. Ciavarella.
The Company’s full financial report can be found on EDGAR through the following link: Nasdaq:NWGI SEC Filings.
About Newgioco Group, Inc.
Newgioco Group, Inc., is a global leisure gaming technology company operating in 12 countries worldwide, with fully licensed online and land-based gaming operations in Italy. The Company’s innovative alternative wagering system services online operators, resort concept casinos, retail neighborhood betting establishments and franchise distribution networks.
Newgioco offers its clients a full suite of leisure gaming products and services, such as sports betting, esports, virtual sports, online casino, poker, bingo, interactive games and slots. Additional information is available on our corporate website at www.newgiocogroup.com.
Investors may also find us on Facebook® and follow us on Twitter @NWGI_gaming.
This press release contains certain forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are identified by the use of the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “continue,” “predict,” “potential,” “project” and similar expressions that are intended to identify forward-looking statements and includes, among other aspects, statements regarding the intended use of remaining proceeds to continue to develop and execute on our U.S. market expansion, the recent offering transaction providing us readily available resources to execute on our near-term go-to-market strategy in the U.S. which we plan to commence in 2020 and plans to certify all components of Elys, including GLI-33 for point-of-sale (POS) betting within the coming days, followed by GLI-20 for the kiosk and the mobile/tablet component shortly thereafter. These forward-looking statements are based on management’s expectations and assumptions as of the date of this press release and are subject to a number of risks and uncertainties, many of which are difficult to predict that could cause actual results to differ materially from current expectations and assumptions from those set forth or implied by any forward-looking statements. Important factors that could cause actual results to differ materially from current expectations include, among others, the Company’s ability to continue to develop and execute on our U.S. market expansion, the ability to execute on the Company’s near-term go-to-market strategy in the U.S. and to commence the strategy in 2020, the ability to certify all components of Elys, including GLI-33 for point-of-sale (POS) betting within the coming days, followed by GLI-20 for the kiosk and the mobile/tablet component shortly thereafter, the duration and scope of the COVID-19 outbreak worldwide, including the impact to the state and local economies, and the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and its subsequent filings with the U.S. Securities and Exchange Commission, including subsequent periodic reports on Form 10-Q and current reports on Form 8-K. The information in this release is provided only as of the date of this release, and the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events, except as required by law.