UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934
Filed
by the Registrant |
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☒ |
Filed
by a Party other than the Registrant |
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Check
the appropriate box:
☒ |
Preliminary
Proxy Statement |
☐ |
Confidential,
For Use of the Commission Only (as Permitted by Rule 14a-6(e)(2)) |
☐ |
Definitive
Proxy Statement |
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Definitive
Additional Materials |
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Soliciting
Material Pursuant to §240.14a-12 |
ESPORTS
ENTERTAINMENT GROUP, INC.
(Name
of Registrant as Specified in its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
☒ |
No
fee required. |
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Fee
paid previously with preliminary materials. |
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Fee
computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 |
ESPORTS
ENTERTAINMENT GROUP, INC.
January
[●], 2024
Dear
Fellow Esports Entertainment Group, Inc. Stockholders:
We
invite you to attend the 2023 Annual Meeting of Stockholders of Esports Entertainment Group, Inc. to be held virtually at www.virtualshareholdermeeting.com/GMBL2023
on [●], 2024, at 10:00 a.m. Eastern Time.
The
Notice of the Annual Meeting and proxy statement (“Proxy Statement”) accompanying this letter provide information concerning
matters to be considered and acted upon at the meeting. There will be a question-and-answer and discussion period as part of the meeting.
Our 2023 results are presented in detail in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, which is accessible
as indicated in the Proxy Statement.
Your
vote is very important. We encourage you to read all of the important information in the Proxy Statement and vote your shares as
soon as possible. Whether or not you plan to attend, you can be sure your shares are represented at the Annual Meeting by promptly submitting
your vote by the Internet, telephone or mail using a paper copy of the proxy card.
On
behalf of the Board of Directors, thank you for your continued confidence and investment in Esports Entertainment Group, Inc.
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Sincerely, |
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/s/
Jan Jones Blackhurst |
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Jan
Jones Blackhurst |
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Chair
of the Board of Directors |
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/s/
Alex Igelman |
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Alex
Igelman |
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Chief
Executive Officer |
ESPORTS
ENTERTAINMENT GROUP, INC.
Block
6, Triq Paceville
St.
Julians, Malta, STJ 3109
Telephone:
356 2713 1276
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
to
be held on [●], 2024
To
the Stockholders of Esports Entertainment Group, Inc.:
The
2023 Annual Meeting of the Stockholders (the “Annual Meeting”) of Esports Entertainment Group, Inc., a Nevada corporation
(together with its subsidiaries, “Company”, “Esports”, “we”, “us” or “our”),
will be held on [●], 2024, at 10:00 a.m. Eastern Time virtually at www.virtualshareholdermeeting.com/GMBL2023. You or your proxy
holder will be able to participate and vote, by visiting the meeting link above and entering the control number on the proxy card you
received. You are not required to register before the meeting starts.
The
purpose of the Annual Meeting is to consider and act upon the following matters:
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1. |
To
elect four directors to serve until the next annual meeting of stockholders and until their respective successors shall have been
duly elected and qualified (Proposal No. 1); |
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2. |
To
approve, in a non-binding advisory vote, the compensation of the Company’s named executive officers as disclosed in this proxy
statement (“Proxy Statement”) (Proposal No. 2); |
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3. |
To
ratify the selection of Marcum LLP as the Company’s independent registered public accounting firm for the fiscal year ending
June 30, 2024 (Proposal No. 3); |
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4. |
To
approve the potential issuance of an excess of 19.99% of our outstanding common stock, par value $0.001 per share (the “Common
Stock”), under the Company’s Series D Convertible Preferred Stock, Series D Preferred Stock Warrants and
Common Stock Warrants issued on May 22, 2023 (Proposal No. 4); |
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5. |
To
approve an amendment to the Company’s Articles of Incorporation to increase the Company’s authorized shares of Common
Stock from 1.25 million to 500 million shares. (Proposal No. 5); and |
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6. |
To
transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. |
The
foregoing items of business are more fully described in the Proxy Statement that is attached and made a part of this Notice. Only stockholders
of record of the Company’s Common Stock at the close of business on [●] (the “Record Date”) will be entitled
to notice of, and to vote at, the Annual Meeting or any adjournment thereof.
All
stockholders are cordially invited to attend the Annual Meeting. We are providing proxy material to our stockholders via mail and the
Internet at www.proxyvote.com. Please give the proxy materials your careful attention.
BY
ORDER OF THE BOARD OF DIRECTORS
/s/
Jan Jones Blackhurst |
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/s/
Alex Igelman |
Jan
Jones Blackhurst |
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Alex
Igelman |
Chair
of the Board of Directors |
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Chief
Executive Officer |
[●] |
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[●] |
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD ON [●], 2024
The
Notice and Proxy Statement and Annual Report on Form 10-K are available at www.proxyvote.com.
Your
vote is important. We encourage you to review all of the important information contained in the proxy materials before voting.
TABLE
OF CONTENTS
ESPORTS
ENTERTAINMENT GROUP, INC.
Block
6, Triq Paceville
St.
Julians, Malta, STJ 3109
Telephone:
356 2713 1276
PROXY
STATEMENT
ANNUAL
MEETING OF STOCKHOLDERS
TO
BE HELD ON [●], 2024
GENERAL
INFORMATION ABOUT THE PROXY
STATEMENT
AND ANNUAL MEETING
General
This
proxy statement (“Proxy Statement”) is furnished in connection with the solicitation of proxies by the Board of Directors
(the “Board”) of Esports Entertainment Group, Inc. (the “Company,” “we” or “us”), for
use at the 2023 Annual Meeting of the Company’s stockholders (the “Annual Meeting”) to be held virtually at www.virtualshareholdermeeting.com/GMBL2023,
on [●], 2024, at 10:00 a.m. Eastern Time, and at any adjournment or postponement thereof, for the purposes set forth in the accompanying
Notice of Annual Meeting of Stockholders. Whether or not you expect to attend the Annual Meeting, please vote your shares as promptly
as possible to ensure that your vote is counted. It is contemplated that this Proxy Statement and the accompanying form of Proxy will
first be mailed to the Company’s stockholders on or about [●], 2024.
Revocability
of Proxies
All
Proxies which are properly completed, signed and returned prior to the Annual Meeting, and which have not been revoked, will be voted
in favor of the proposals described in this Proxy Statement unless otherwise directed. A stockholder of record may revoke his, her or
its Proxy at any time before it is voted either by delivering to the Secretary of the Company, at its principal executive offices located
at Block 6, Triq Paceville, St. Julians, Malta, STJ 3109, a written notice of revocation or a duly-executed Proxy bearing a later date
or by attending the Annual Meeting and voting during the meeting via the virtual meeting platform.
If
your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.
Solicitation
of Proxies
The
Company will solicit stockholders by mail through its regular employees and will request banks and brokers and other custodians, nominees
and fiduciaries, to solicit their customers who have stock of the Company registered in the names of such persons and will reimburse
them for reasonable, out-of-pocket costs. In addition, the Company may use the service of its officers and directors to solicit proxies,
personally or by electronic mail or telephone, without additional compensation.
Record
Date
Stockholders
of record at the close of business on [●] (the “Record Date”), will be entitled to receive notice of, attend and vote
at the Annual Meeting.
Voting
Securities
As
of [●], 2024, there were [●] shares of Common Stock issued and outstanding. Stockholders are entitled to one vote for each
share of Common Stock held by them. In addition, as of [●], there were 100 shares of series E mirroring preferred
stock (“Series E Preferred Stock”) issued and outstanding. The Series E Preferred Stock has voting rights on the authorized
share increase (Proposal No. 5) equal to six (6) million common votes per share, provided that any votes cast by the Series E
Preferred Stock with respect to Proposal No. 5 must be counted by the Company in the same proportion as the shares of common stock voted
on this proposal. For example, if 50.5% of the shares of Common Stock voted by proxy or during the Annual Meeting are voted “FOR”
Proposal No. 5, then the Company will count 50.5% of the votes cast (or votes) by the holder of the Series E Preferred Stock as votes
“FOR” Proposal No. 5. Holders of Common Stock and Series E Preferred Stock will vote on Proposal 5 as a single class.
Under
our bylaws, the presence at the Annual Meeting or by proxy of the holders of thirty-three and 34/100 percent (33.34%) of all stock issued
and outstanding and entitled to vote, present during the Annual Meeting or represented by proxy, is necessary to constitute a quorum
at the Annual Meeting. In the absence of a quorum at the Annual Meeting, the Annual Meeting may be postponed or adjourned from time to
time without notice, except as required by law, until a quorum is formed. For purposes of the quorum and the discussion below regarding
the vote necessary to take stockholder action, stockholders of record who are present at the Annual Meeting or by proxy and who abstain,
including broker non-votes (as described below), and brokers holding customers’ shares of record who cause abstentions to be recorded
at the Annual Meeting, are considered stockholders who are present for purposes of determining the presence of a quorum.
Why
am I being provided with these proxy materials?
We
have delivered these proxy materials to you in connection with the solicitation by our Board of proxies for the matters to be voted on
at our Annual Meeting and at any adjournment or postponement thereof.
What
do I do if my shares are held in “street name”?
If
your shares are held in a brokerage account or by a bank or other holder of record, you are considered the “beneficial owner”
of shares held in “street name.” As the beneficial owner, you have the right to direct your broker, bank or other holder
of record on how to vote your shares by following their instructions for voting. Please refer to information from your bank, broker or
other nominee on how to submit your voting instructions.
What
if other matters come up at the Annual Meeting?
As
of the date of this Proxy Statement, we did not know of any matters to be properly presented at the Annual Meeting other than those referred
to in this Proxy Statement. If other matters are properly presented at the Annual Meeting or any adjournment or postponement thereof
for consideration, and you have submitted a proxy card, the persons named in your proxy card will have the discretion to vote on those
matters for you.
Voting
of Proxies
All
valid Proxies received prior to the Annual Meeting will be voted. The Board recommends that you vote by Proxy even if you plan to attend
the Annual Meeting. You can vote your shares by Proxy via Internet, via telephone, or, if you request a paper copy of the proxy materials
and receive a proxy card, by mail. To vote via Internet, go to www.proxyvote.com and follow the instructions. To vote by telephone,
follow the instructions provided on the proxy card or voting card, as applicable. To vote by mail, fill out the enclosed Proxy, sign
and date it, and return it in the enclosed postage-paid envelope to Broadridge Financial Solutions, Inc. Voting prior to the Annual Meeting
will not limit your right to vote at the Annual Meeting if you attend the Annual Meeting and vote via the virtual meeting platform. However,
if your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy executed in your favor, from
the holder of record to be able to vote at the Annual Meeting.
Voting
Procedures
Your
vote is important no matter how many shares you own. Please take the time to vote. Take a moment to read the instructions below.
Choose the way to vote that is easiest and most convenient for you, and cast your vote as soon as possible.
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You
may vote over the Internet. |
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You
may vote your shares by following the “Vote by Internet” instructions on the accompanying proxy card. If you vote over
the Internet, you do not need to vote by telephone or complete and mail your proxy card. |
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You
may vote via the telephone. |
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If
you are a stockholder of record, you can submit your Proxy by calling the telephone number specified on the paper copy of the proxy
card you received. You must have the control number that appears on your proxy card available when submitting your Proxy over the
telephone. |
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Most
stockholders who hold their shares in street name may submit voting instructions by calling the number specified on the paper copy
of the voting instruction form provided by their bank, broker, or other nominee. Those stockholders should check the voting instruction
form for telephone voting availability. |
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You
may vote during the Annual Meeting. You or your proxy holder may vote your shares during the Annual Meeting via the virtual meeting
platform. |
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You
may vote by mail. If you received a proxy card by mail, you may vote by completing, dating and signing the proxy card delivered
and promptly mailing it in the postage-paid envelope provided. If you vote by mail, you do not need to vote over the Internet or
by telephone. |
Uninstructed
Shares
All
Proxies that are executed or are otherwise submitted over the Internet or by telephone will be voted on the matters set forth in the
accompanying Notice of Annual Meeting of Stockholders in accordance with the instructions set forth therein. However, if no choice is
specified on a Proxy as to one or more of the proposals, the Proxy will be voted in accordance with the Board’s recommendations
on such proposals as set forth in this Proxy Statement.
Votes
Required to Approve a Proposal
Under
our bylaws, the holders of thirty-three and 34/100 percent (33.34%) of all stock issued, outstanding and entitled to vote at a meeting,
present at the Annual Meeting or represented by proxy will constitute a quorum for the transaction of business at the Annual Meeting.
Shares of Common Stock and Series E Preferred Stock represented at the Annual Meeting or by proxy (including shares which abstain or
do not vote with respect to one or more of the matters presented for stockholder approval) will be counted for purposes of determining
whether a quorum is present at the Annual Meeting. If a quorum is not present, the Annual Meeting may be adjourned until a quorum is
obtained.
If
you are the beneficial owner of shares held in “street name” by a broker, then the broker, as the record holder of the shares,
is required to vote those shares in accordance with your instructions. If you do not give instructions to the broker, then the broker
will be entitled to vote the shares with respect to “discretionary” items (such as Proposal No. 2) but will not be permitted
to vote the shares with respect to “non-discretionary” items (all other proposals in this Proxy Statement, in which case,
each share will be treated as a “broker non-vote”).
The
following votes are required for approval of the proposals being presented at the Annual Meeting:
Proposal
No. 1: Election of Directors. Votes may be cast: “FOR,” “AGAINST” or “ABSTAIN”
nominees noted by you on the appropriate portion of your Proxy or voting instruction card. At the Annual Meeting, four directors are
to be elected, which number shall constitute four of the total five seats of our Board, to hold office until the next annual meeting
of stockholders and until their successors shall have been duly elected and qualified. Pursuant to our bylaws, as amended, directors
are to be elected by a plurality. This means that the four candidates receiving the highest number of affirmative votes at the Annual
Meeting will be elected as directors. Proxies cannot be voted for a greater number of persons than the number of nominees named or for
persons other than the named nominees. Abstentions and votes against will not be deemed a vote with respect to the director nominee indicated
and will have no impact on the election of directors although it will be counted for the purposes of determining whether there is a quorum.
Broker non-votes will have no effect on the outcome of this proposal.
Proposal
No. 2: Non-binding advisory vote to approve the compensation of the Company’s named executive officers as disclosed in this Proxy
Statement. Votes may be cast: “FOR,” “AGAINST” or “ABSTAIN.” The affirmative
vote of the holders of shares of Common Stock representing a majority of the shares of Common Stock cast at the Annual Meeting or by
proxy is required for the approval, on a non-binding advisory basis, of the compensation of the Company’s named executive officers
as disclosed in this Proxy Statement. Abstentions and broker non-votes will have no effect on the outcome of this proposal.
Proposal
No. 3: To ratify the selection of Marcum LLP as the Company’s independent registered public accounting firm for the fiscal year
ending June 30, 2024. Votes may be cast: “FOR,” “AGAINST” or “ABSTAIN.” The
affirmative vote of the holders of shares of Common Stock representing a majority of the shares of Common Stock cast at the Annual Meeting
or by proxy is required for the ratification of the selection of Marcum LLP as our independent registered public accounting firm for
the current fiscal year. Abstentions will have no effect on the outcome of this proposal. There will be no broker non-votes with respect
to this proposal.
Proposal
No. 4: To approve the potential issuance of an excess of 19.99% of our outstanding Common Stock, par value $0.001 per share (the
“Common Stock”), under the Company’s Series D Convertible Preferred Stock, Series D Preferred Stock Warrants
and Common Stock Warrants issued on May 22, 2023. Votes may be cast: “FOR,” “AGAINST” or
“ABSTAIN.” The affirmative vote of the holders of shares of Common Stock representing a majority of the shares of
Common Stock cast at the Annual Meeting or by proxy is required for the approval of the potential issuance of in excess of 19.99% of
outstanding Common Stock under the Company’s Series D Convertible Preferred Stock (the “Series D Preferred Stock”).
Abstentions and broker non-votes will have no effect on the outcome of this proposal.
Proposal
No. 5: To approve an amendment to the Company’s Articles of Incorporation to increase the authorized shares of Common Stock from
1.25 million to 500 million shares. Votes may be cast: “FOR,” “AGAINST” or “ABSTAIN.”
The affirmative vote of the holders of shares of Common Stock representing a majority of the voting power of all issued and outstanding
Common Stock is required for the approval of the amendment to the Company’s Articles of Incorporation to increase the authorized
shares of Common Stock. Abstentions and broker non-votes will have the same effect as a vote “AGAINST” the proposal as they
will not be counted toward reaching a majority of the issued and outstanding shares. The Series E Preferred Stock is voted in proportion
to the Common Stock vote for this proposal.
Tabulation
and Reporting of Voting Results
Preliminary
voting results will be announced at the Annual Meeting. Final voting results will be tallied by the inspector of election after the taking
of the vote at the Annual Meeting. The Company will publish the final voting results in a Current Report on Form 8-K filed with the SEC
within four business days from the date of the Annual Meeting.
This
proxy statement, the accompanying proxy card and our Annual Report to stockholders were first made available to stockholders on or about
[●], by way of our definitive proxy filing.
A
copy of our Annual Report on Form 10-K for the year ended June 30, 2023, as filed with the SEC, except for exhibits, will be furnished
without charge to any stockholder upon written or oral request to Esports Entertainment Group, Inc., Block 6, Triq Paceville, St. Julians,
Malta, STJ 3109, Attention: Secretary.
Proxy
Materials Are Available on the Internet
The
Company uses the Internet as a means of furnishing proxy materials to stockholders. We are sending our stockholders instructions on how
to access the proxy materials online at www.proxyvote.com or request a printed copy of materials and how to submit a Proxy electronically
using the Internet.
Stockholders
may follow the instructions to elect to receive future proxy materials in print by mail or electronically by email. We encourage stockholders
to take advantage of the availability of the proxy materials online to reduce environmental impact and mailing costs.
QUESTIONS
AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING
Why
am I receiving these materials?
We
have made these proxy materials available to you on the Internet because the Board is soliciting your Proxy to vote at the Annual Meeting.
According to our records, you were a stockholder of the Company as of the end of business on [●].
You
are invited to attend the Annual Meeting to vote on the proposals described in this Proxy Statement. However, you do not need to attend
the Annual Meeting to vote your shares. Instead, you may vote by the Internet, or, if you request a paper copy of the proxy materials
and receive a proxy card, by telephone or mail.
The
Company intends to mail the proxy materials on or about [●], 2024, to all stockholders of record on the Record Date entitled to
vote at the Annual Meeting.
What
is the proxy card?
If
you received a printed set of the proxy materials, the proxy card enables you to appoint Jan Jones Blackhurst, Chair of the Board of
Directors, Alex Igelman, Chief Executive Officer, or Lydia Roy, Group General Counsel and Compliance, Corporate Secretary, as your representative
at the Annual Meeting. By completing and returning a proxy card, you are authorizing Jan Jones Blackhurst, Alex Igelman, or Lydia Roy
to vote your shares at the Annual Meeting in accordance with your instructions on the proxy card. This way, your shares will be voted
whether or not you attend the Annual Meeting.
When
and where is the Annual Meeting being held?
The
Annual Meeting will be held on [●], 2024, commencing at 10:00 a.m., Eastern Time, virtually at www.virtualshareholdermeeting.com/GMBL2023.
You or your proxy holder will be able to participate and vote, by visiting the meeting link above and entering the control number on
the proxy card or notice of the meeting you received. You are not required to register before the meeting starts. Stockholders participating
in the virtual meeting will be in a listen-only mode and will not be able to speak during the live audio webcast. However, in order to
maintain the interactive nature of the meeting, virtual attendees are able to vote and submit questions or comments to the Company’s
officers and directors during the meeting via the online meeting website.
Who
can vote at the Annual Meeting?
Only
stockholders of record at the close of business on [●], will be entitled to vote at the Annual Meeting.
On
the Record Date, there were [●] shares of Common Stock outstanding and entitled to vote and there were 100 shares
of Series E Preferred Stock outstanding that have voting rights on the authorized share increase proposal (Proposal No. 5).
The
Annual Meeting will begin promptly at 10:00 a.m., Eastern Time. Check-in will begin one-half hour prior to the Annual Meeting. Please
allow ample time for the check-in procedures.
Stockholder
of Record: Shares Registered in Your Name
If
on [●], your shares were registered directly in your name with Esports Entertainment Group, Inc.’s transfer agent, VStock
Transfer, LLC, then you are a stockholder of record. As a stockholder of record, you may vote during the Annual Meeting using the virtual
meeting platform, vote by the Internet or, if you request a paper copy of the proxy materials and receive a proxy card, by telephone
or mail. Whether or not you plan to attend the Annual Meeting, we urge you to vote.
Beneficial
Owner: Shares Registered in the Name of a Broker or Bank
If
on [●], your shares were held in an account at a brokerage firm, bank, dealer, or other similar organization, rather than in your
name, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to
you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting
at the Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares
in your account. You are also invited to attend the Annual Meeting. However, since you are not the stockholder of record, you may not
vote your shares at the Annual Meeting unless you request and obtain a valid proxy from your broker or other agent.
What
am I voting on?
The
following matters are scheduled for a vote:
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1. |
To
elect four directors to serve until the next annual meeting of stockholders and until their respective successors shall have been
duly elected and qualified (Proposal No. 1); |
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2. |
To
approve, in a non-binding advisory vote, the compensation of the Company’s named executive officers as disclosed in this Proxy
Statement (Proposal No. 2); |
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3. |
To
ratify the selection of Marcum LLP as the Company’s independent registered public accounting firm for the fiscal year ending
June 30, 2024 (Proposal No. 3); |
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4. |
To
approve the potential issuance of an excess of 19.99% of our outstanding common stock, par value $0.001 per share (the “Common
Stock”), under the Company’s Series D Convertible Preferred Stock, Series D Preferred Stock Warrants and
Common Stock Warrants issued on May 22, 2023 (Proposal No. 4) |
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5. |
To
approve an amendment to the Company’s Articles of Incorporation to increase the authorized shares of Common Stock from 1.25
million to 500 million shares (Proposal No. 5); and |
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6. |
To
transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. |
The
Board is not currently aware of any other business that will be brought before the Annual Meeting.
How
do I vote?
Please
see Voting Procedures on page 2.
How
many votes do I have?
On
each matter to be voted upon, owners of Common Stock have one vote for each share of Common Stock as of the Record Date. The Series E
Preferred Stock has six (6) million votes for each share of Series E Preferred Stock as of the Record Date.
What
is a quorum for purposes of conducting the Annual Meeting?
The
presence, at the Annual Meeting or by proxy, of the holders of thirty-three and 34/100 percent (33.34%) of all stock issued and outstanding
and entitled to vote at the Annual Meeting is necessary to constitute a quorum to transact business. As there were [●] shares of
voting power from the issued and outstanding shares of Common Stock and Series E Preferred Stock entitled to vote as of the Record Date,
the quorum for the Annual Meeting is [●] shares. If a quorum is not present or represented at the Annual Meeting, the stockholders
entitled to vote thereat, present at the Annual Meeting or by proxy, may adjourn the Annual Meeting from time to time without notice
or other announcement, except as required by law, until a quorum is present or represented.
What
if I return a proxy card but do not make specific choices?
If
you return a signed and dated proxy card without marking any voting selections, your shares will be voted “FOR” the
election of the directors (Proposal No. 1), “FOR” approval, on a non-binding advisory basis, of the compensation of
the Company’s named executive officers as disclosed in this Proxy Statement (Proposal No. 2), “FOR” ratification
of the selection of Marcum LLP as the Company’s independent registered public accounting firm for the fiscal year ending June 30,
2024 (Proposal No. 3), “FOR” the approval of the potential issuance of an excess of 19.99% of our outstanding common
stock, par value $0.001 per share (the “Common Stock”), under the Company’s Series D Convertible Preferred Stock, Series
D Preferred Stock Warrants and Common Stock Warrants issued on May 22, 2023 (Proposal No. 4), “FOR” the
approval of an amendment to the Company’s Articles of Incorporation to increase the authorized shares of Common Stock from 1.25
million to 500 million shares (Proposal No. 5), and “FOR” approval of any adjournment of the Annual Meeting, if necessary
or appropriate, to transact such other business as may properly come before the Annual Meeting and all adjournments and postponements
thereof; and if any other matter is properly presented at the Annual Meeting, your proxy holder (the individual named on your proxy card)
will vote your shares using his best judgment.
How
does the Board recommend that I vote?
Our
Board recommends that you vote your shares “FOR” the election of the directors (Proposal No. 1), “FOR”
approval, on a non-binding advisory basis, the compensation of the Company’s named executive officers as disclosed in this Proxy
Statement (Proposal No. 2), “FOR” ratification of the selection of Marcum LLP as the Company’s independent registered
public accounting firm for the fiscal year ending June 30, 2023 (Proposal No. 3), “FOR” the approval of the potential
issuance of an excess of 19.99% of our outstanding common stock, par value $0.001 per share (the “Common Stock”), under the
Company’s Series D Convertible Preferred Stock, Series D Preferred Stock Warrants and Common Stock Warrants issued
on May 22, 2023 (Proposal No. 4), “FOR” the approval of an amendment to the Company’s Articles of Incorporation
to increase the authorized shares of Common Stock from 1.25 million to 500 million shares (Proposal No. 5), and “FOR”
approval of any adjournment of the Annual Meeting, if necessary or appropriate, to transact such other business as may properly come
before the Annual Meeting and all adjournments and postponements thereof. If no choice is specified on your Proxy as to one or more of
the proposals, the Proxy will be voted in accordance with the Board’s recommendations on such proposals as set forth in this Proxy
Statement.
Who
is paying for this proxy solicitation?
We
will bear the cost of mailing and solicitation of proxies. Proxies may be solicited by mail or personally by our directors, officers
or employees, none of whom will receive additional compensation for such solicitation. Those holding shares as of record for the benefit
of others, or nominee holders, are being asked to distribute proxy soliciting materials to, and request voting instructions from, the
beneficial owners of such shares. We will reimburse nominee holders for their reasonable out-of-pocket expenses.
What
does it mean if I receive more than one Proxy Statement and annual report or Notice of Internet Availability, as applicable?
If
you receive more than one Proxy Statement and annual report, your shares may be registered in more than one name or in different accounts.
Please submit a vote for each Proxy Statement and annual report received to ensure that all of your shares are voted.
I
share the same address with another Esports Entertainment Group, Inc. stockholder. Why has our household only received one Proxy Statement
and annual report or Notice of Internet Availability, as applicable?
The
SEC’s rules permit us to deliver a single Proxy Statement and annual report or Notice of Internet Availability, as applicable,
to one address shared by two or more of our stockholders. This practice, known as “householding,” is intended to reduce the
Company’s printing and postage costs. We and some brokers have delivered only one Proxy Statement and annual report or Notice of
Availability, as applicable, to stockholders who share a single address, unless we or the applicable broker received contrary instructions
from any stockholder at that address. However, any stockholder residing at the same address who wishes to receive a separate copy of
the Proxy Statement and annual report or Notice of Availability, as applicable, may make such a request by notifying the broker or Broadridge
Financial Solutions, Inc. at 866-540-7095 or in writing at Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY 11717 if
the shares are held in a brokerage account or us if the shares are registered shares. Stockholders can notify us by sending a written
request addressed to Attn: Secretary, Esports Entertainment Group, Inc., Block 6, Triq Paceville, St. Julians, Malta, STJ 3109 or by
calling us at +356 2713 1276.
Can
I change my vote after submitting my proxy?
Yes.
You can revoke your proxy at any time before the final vote at the Annual Meeting. If you are the record holder of your shares, you may
revoke your proxy in any one of three ways:
|
● |
You
may change your proxy by Internet or telephone or submit another properly completed proxy card with a later date; |
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● |
You
may send a timely written notice that you are revoking your proxy to the Company at Block 6, Triq Paceville, St. Julians, Malta,
STJ 3109, Attn: Secretary; or |
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● |
You
may attend the Annual Meeting and vote during the meeting via the virtual meeting platform. Simply attending the Annual Meeting will
not, by itself, revoke your proxy. |
If
your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.
How
are votes counted?
Votes
will be counted by the inspector of elections appointed for the Annual Meeting, who will separately count “FOR,” “AGAINST”
and “ABSTAIN” votes, and broker non-votes.
Is
my vote kept confidential?
Proxy
instructions, ballots and voting tabulations that identify individual stockholders are handled in a manner that protects your voting
privacy. Your vote will not be disclosed either within the Company or to third parties, except:
|
● |
as
necessary to meet applicable legal requirements; |
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to
allow for the tabulation and certification of votes; and |
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to
facilitate a successful proxy solicitation. |
Occasionally,
stockholders provide written comments on their proxy cards, which may be forwarded to the Company’s management and the Board.
How
can I find out the results of the voting at the Annual Meeting?
Preliminary
voting results will be announced at the Annual Meeting. Final voting results will be disclosed in a Current Report on Form 8-K filed
after the Annual Meeting.
CORPORATE
GOVERNANCE
Board
of Directors
Set
forth below are the names of and certain biographical information about each member of our Board as of December 31, 2023. The information
presented includes each director’s principal occupation and business experience for the past five years and the names of other
public companies of which he or she has served as a director during the past five years.
The
Board, upon the recommendation of our Compensation, Nominating and Corporate Governance Committee (the “CNCG Committee”),
has nominated: Jan Jones Blackhurst, Damian Mathews, Alan Alden, and Robert Soper for election as directors, each to hold office until
their successors are elected and qualified or until their earlier resignation or removal. Chul Woong Lim was not nominated by the CNCG
Committee and therefore is not included within certain sections below. No nominee recommendations were received by the CNCG Committee
from any stockholder or group of stockholders who beneficially own more than five percent of our Common Stock.
Name |
|
Current
Age |
|
Position |
Jan
Jones Blackhurst |
|
74 |
|
Chair
of the Board of Directors |
Damian
Mathews |
|
52 |
|
Chief
Financial Officer and Chief Operating Officer and Director |
Alan
Alden |
|
62 |
|
Director |
Robert
Soper |
|
51 |
|
Director |
There
are currently five authorized board seats and the Board has only nominated four individuals to fill the five board seats at this meeting.
The
following noteworthy experience, qualifications, attributes and skills for each Board member, together with the biographical information
for each person described below, led to our conclusion that the person should serve as a director in light of our business and structure:
Jan
Jones Blackhurst
Ms.
Jones Blackhurst has served as a director of the Company since May 2022 and as Chair of the Board of Directors since December 3, 2022.
Ms. Jones Blackhurst has served as a director of Caesars Entertainment, Inc. (Nasdaq: CZR) since October 2019. Ms. Jones Blackhurst served
as Executive Vice President, Public Policy and Corporate Responsibility of Caesars from May 2017 through September 2019. Ms. Jones Blackhurst
also served as Executive Vice President of Communications and Government Relations of Caesars from November 2011 until May 2017 and as
Senior Vice President of Communications and Government Relations of Caesars from November 1999 to November 2011. Ms. Jones Blackhurst
has over 20 years of experience in the gaming industry and has played a key role in innovating responsible gaming programs that are now
used throughout the industry. Ms. Jones Blackhurst serves as the Chairwoman of the Public Education Foundation and as Chief Executive-In-Residence
of the UNLV International Gaming Institute. Ms. Jones Blackhurst became Executive Director, UNLV Black Fire Leadership Initiative in
January 2022. Since February 2022, Ms. Jones Blackhurst has served as a director of Gaming & Hospitality Acquisition Corp. Prior
to joining Caesars, Ms. Jones Blackhurst served two terms as Mayor of Las Vegas, from 1991 until 1999. Ms. Blackhurst was selected to
serve as a director because of her extensive experience in the gaming industry and proven leadership abilities.
Damian
Mathews
Mr.
Mathews is the Company’s Chief Operating Offer, reappointed effective May 29, 2023. Mr. Mathews joined as a Director in June 2020
and was the chair of the Audit Committee until he took on other roles at the Company in 2022. Mr. Mathews previously served as our Chief
Financial Officer of the Company since April 2022 and added the role of Chief Operating Officer in June 2022 until his resignation from
those positions on December 31, 2022. Mr. Mathews combines over 25 years of experience in senior finance positions within investment
management, banking and accounting. Previously, Mr. Mathews served as Group Chief Operating Officer at Auckland Real Estate Co. from
2021 to 2022 and as Chief Financial Officer at the Qatar and Abu Dhabi Investment Company (a sovereign wealth fund owned investment company)
from 2014 to 2020. From 2012 to 2014 he was a Director of his own consultancy business, NZ Pacific Investments, in New Zealand. From
2009 to 2012 he held senior management positions including General Manager Finance (New Zealand); Head of Finance and Operations Americas
(United States); and Head of Change Management (Australia) at Commonwealth Bank of Australia Group. From 2007 to 2008, Mr. Mathews was
a Director in Product Control at ABN Amro Bank in London. From 2002 to 2006 he held various senior financial controller positions at
Royal Bank of Scotland Group in London. From 1998 to 2002 he was an Assistant Vice President at Credit Suisse First Boston investment
bank in London and the Bahamas. From 1994 to 1998, he was an Assistant Manager at KPMG in London. He has a joint honors undergraduate
degree in Economics and Politics from the University of Bristol in the United Kingdom and is a fellow of the Institute of Chartered Accountants
in England and Wales. Mr. Matthews was selected to serve as a director due to his extensive financial experience and valuable operational
and strategic insights to the Board’s decision-making process from his term as Chief Financial Officer of the Company.
Alan
Alden
Mr.
Alden has served as a director of the Company since October 2020. Mr. Alden has been a specialist in advising remote gaming companies
located in Malta since 2000, when he advised the first remote gaming companies as the Senior Manager of Enterprise Risk Services at Deloitte
& Touche (Malta). In 2006, Mr. Alden established Kyte Consultants Ltd, a company that specialized in the remote gaming and payment
card sectors, to assist companies located in Malta. In 2009, Mr. Alden became a founding director in Contact Advisory Services Ltd, a
licensed Company Service Provider that offers a complete service to its customers, from company incorporation, to licensing for gaming
and financial institutions. Since 2010, Mr. Alden has served as the General Secretary of the Malta Remote Gaming Council. Mr. Alden is
a Certified Information Systems Security Professional and a Certified Information Systems Auditor. Mr. Alden was also the founding President
of the ISACA Malta Chapter between 2005 and 2008. In 2015, Mr. Alden became a Part Time Lecturer on IT Auditing at the University of
Malta. Mr. Alden was selected to serve as a director because of his extensive experience in the gaming industry.
Robert
Soper
Mr.
Soper has served as a director since June 2023. Mr. Soper has served as Chief Executive Officer and Founder of Sun Gaming & Hospitality
LLC since April 2017. Mr. Soper also served as International President for Mohegan Gaming & Entertainment from March 2021 to June
2022. Prior to this, Mr. Soper spent over 20 years serving in various executive roles, including as President and Chief Executive Officer
of various Mohegan Sun entities. Mr. Soper previously served as President and Chief Executive Officer of Mohegan Sun Pocono in Wilkes-Barre,
PA, and President and Chief Executive Officer of Mohegan Sun in Uncasville, Connecticut. As President and Chief Executive Officer of
these properties, Mr. Soper was responsible for overseeing the successful launch of the first casino in the Commonwealth of Pennsylvania
as well as the launch of online gaming for the organization. In addition, Mr. Soper served as President and Chief Executive Officer of
the Mohegan parent company, Mohegan Tribal Gaming Authority (MTGA) where he oversaw all business development efforts and day-to-day operations
of MTGA. Mr. Soper graduated magna cum laude with a Bachelor of Business Administration in Economics from the University of Georgia,
and graduated with a Juris Doctor from the University of Georgia Law with honors, also serving on the Editorial Board of the Georgia
Law Review. Mr. Soper currently serves on the board of directors of Playgon Games, a Toronto-based public company. Mr. Soper was selected
to serve as a director due to his extensive experience in the gaming industry.
We
believe the following directors nominated for re-election at the Annual Meeting are qualified to serve for the following reasons:
Name |
|
Reason |
Jan
Jones Blackhurst |
|
Experience
with casinos, gambling, and industry boards. |
Damian
Mathews |
|
Experience
in financial and accounting leadership roles. |
Alan
Alden |
|
Experience
advising companies in gaming. |
Robert
Soper |
|
Experience
with casinos and gambling. |
Family
Relationships
There
are no family relationships between any of our directors or executive officers.
Delinquent
Section 16(a) Reports
Section
16(a) of the Exchange Act requires the Company’s directors, executive officers and persons who beneficially own 10% or more of
a class of securities registered under Section 12 of the Exchange Act to file reports of beneficial ownership and changes in beneficial
ownership with the SEC. Directors, executive officers and greater than 10% stockholders are required by the rules and regulations of
the SEC to furnish the Company with copies of all reports filed by them in compliance with Section 16(a). To the Company’s knowledge,
based solely on a review of reports furnished to it, for the year ended June 30, 2023, all of the Company’s officers, directors
and ten percent holders have made the required filings.
Board
Composition and Director Independence
Our
Common Stock and warrants are listed on The Nasdaq Capital Market. Under the rules of Nasdaq, “independent” directors must
make up a majority of a listed company’s Board of Directors. In addition, applicable Nasdaq rules require that, subject to specified
exceptions, each member of a listed company’s audit and compensation committees be independent within the meaning of the applicable
Nasdaq rules. Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act.
Currently,
there are five individuals who make up our five-member Board of Directors. We have chosen to nominate only four members at the annual
meeting so that a thorough search can be made and candidates can be evaluated for the board seat to be vacated by Chul Woong Lim, as
of the date of the Company’s Annual Meeting. The directors elected at this meeting will serve until our next annual meeting or
until their successors are duly elected and qualified.
The
Company defines “independent” as that term is defined in Rule 5605(a)(2) of the Nasdaq Stock Market rules.
In
making the determination of whether a member of the board is independent, our board considers, among other things, transactions and relationships
between each director and his immediate family and the Company, including those reported under the caption “Related Party Transactions.”
The purpose of this review is to determine whether any such relationships or transactions are material and, therefore, inconsistent with
a determination that the directors are independent. On the basis of such review and its understanding of such relationships and transactions,
our board affirmatively determined that Alan Alden, Jan Jones Blackhurst, Robert Soper and Chul Woong Lim are qualified as independent
and do not have any material relationships with us that might interfere with the exercise of independent judgment.
Board
Committees
Our
Board of Directors has established an Audit Committee and a Compensation, Nominating and Corporate Governance Committee (the “CNCG
Committee”). Each committee has its own charter, which is available on our website at https://esportsentertainmentgroup.com/governance-documents/.
Each of the board committees has the composition and responsibilities described below.
Members
will serve on these committees until their resignation or until otherwise determined by our Board of Directors.
Alan
Alden, Jan Jones Blackhurst, Robert Soper, and Chul Woong Lim are independent directors as that term is defined in Section 5605(a)(2)
of the Nasdaq Stock Market rules.
The
members of each committee are, as follows:
Audit
Committee: Mr. Alden, Ms. Jones Blackhurst and Mr. Lim. Mr. Alden serves as Chair.
Our
Board has determined that the Company does not currently have an “audit committee financial expert”, as defined in Item 407(d)(5)
of Regulation S-K. The Company continues to search for a candidate with the qualifications as defined in Item 407(d)(5) of Regulation
S-K. At least one member of the Audit Committee has experience as a senior officer with financial oversight responsibilities.
CNCG
Committee: Ms. Jones Blackhurst, Mr. Alden and Mr. Lim. Ms. Jones Blackhurst serves as Chair.
Audit
Committee
The
Audit Committee oversees the Company’s accounting and financial reporting processes and oversees the audit of the Company’s
consolidated financial statements and the effectiveness of our internal control over financial reporting. The specific functions of this
Committee include, but are not limited to:
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● |
selecting
and recommending to our Board of Directors the appointment of an independent registered public accounting firm and overseeing the
engagement of such firm; |
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|
● |
approving
the fees to be paid to the independent registered public accounting firm; |
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● |
helping
to ensure the independence of the independent registered public accounting firm; |
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|
● |
overseeing
the integrity of our financial statements; |
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● |
preparing
an audit committee report as required by the SEC to be included in our annual Proxy Statement; |
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● |
resolving
any disagreements between management and the auditors regarding financial reporting; |
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|
● |
reviewing
with management and the independent auditors any correspondence with regulators and any published reports that raise material issues
regarding the Company’s accounting policies; |
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|
● |
reviewing
and approving all related-party transactions; and |
|
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|
● |
overseeing
compliance with legal and regulatory requirements. |
Compensation,
Nominating and Corporate Governance Committee
During
the year ended June 30, 2023, the Board merged the Compensation Committee and the Nominating and Corporate Governance Committee into
the Compensation, Nominating and Corporate Governance Committee (the “CNCG Committee”) to streamline the operations of the
Board.
The
CNCG Committee is responsible for setting compensation levels for the Chief Executive Officer (“CEO”), Chief Financial Officer
(“CFO”), and all other Named Executive Officers (“NEOs”) of the Company and members of the Company’s Board
of Directors, establishes compensation, incentive and benefit plans for such individuals and approves payments under the Company’s
incentive plans. In addition, the Committee is responsible for developing and implementing policies and procedures that relate to the
Board’s responsibilities for general corporate governance including Board organization, membership and evaluation to meet its fiduciary
obligations to Esports Entertainment Group, Inc. and its stockholders.
The
Committee will have the following duties and responsibilities:
Compensation
Levels for Named Executive Officers and Directors
|
● |
Establish
compensation packages for the Company’s CEO, CFO, and other NEOs and directors with consideration of pay ranges for comparable
positions in similar size companies. Data for such comparisons is obtained from nationwide surveys conducted by independent compensation
consulting firms and from reviewing other companies’ compensation information included in their proxy statements. |
|
|
|
|
● |
Set
compensation for the Company’s CEO, CFO, and other NEOs within competitive ranges considering performance related factors including
the Company’s overall results during the past year and its performance relative to a budgeted plan or stated goals and objectives.
Consideration also is given to an individual’s contribution to the Company and the accomplishments of departments for which
that individual has management responsibility as well as potential for future contributions to the Company. |
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|
● |
The
Committee will review and approve goals and objectives of the CEO, CFO and other NEOs in consultation with the full Board, evaluate
CEO, CFO, and other NEOs and directors’ performance in light of those objectives, and set CEO, CFO and other NEOs compensation
levels consistent with those objectives. |
|
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|
● |
The
Committee will review and approve the consideration paid to non-employee directors for any annual retainers and/or meeting fees.
No member of the Committee will act to fix his or her own compensation except for uniform compensation paid to all directors for
their services as such. |
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|
● |
The
Committee will review and approve compensation packages for new NEOs and directors and termination or severance packages for the
same and may also approve compensation for other company employees as requested by management. |
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● |
The
Committee will review and approve the awards made under any executive officer bonus plan and provide an appropriate report to the
Board. |
Compensation
Plans
|
● |
Review
the competitiveness of the Company’s executive compensation programs and director compensation to: (a) attract and retain qualified
individuals, (b) provide motivation to achieve the Company’s business objectives, and (c) align the interest of key leadership
with the long-term interests of the Company’s stockholders. |
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● |
Review
trends in management and director compensation, oversee the development of new compensation plans and, when necessary, approve the
revision of existing plans. |
|
● |
Review
and make recommendations concerning long-term incentive compensation plans, including the use of stock options and other equity-based
plans. Except as otherwise delegated by the Board, the Committee will act on behalf of the Board as the “Committee” established
to administer equity-based and employee benefit plans, and as such will discharge any responsibilities imposed on the Committee under
those plans, including making and authorizing grants, in accordance with the terms of those plans. |
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● |
Evaluation
and selection of recipients of stock awards and options, establishing the timing of grants, and setting the option exercise price
within the terms of the Option Plan, if any. |
Resource
Planning
|
● |
Ensures
compensation policies are designed to attract and retain highly skilled individuals, reward outstanding individual performance, encourage
cooperative team efforts and provide an incentive to enhance long term stockholder value. |
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|
● |
Review
and discuss with the Board and senior officers’ plans for officer development and corporate succession plans for the CEO, CFO
and other NEOs. |
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|
● |
Review
periodic reports from management on matters relating to the Company’s personnel appointments and practices. |
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Produce
an annual Report of the Committee on Executive and Director Compensation for the Company’s annual proxy statement. |
Nomination
of Directors
|
● |
Sole
authority to retain and terminate any search firm, at the company’s expense, to be used to identify director candidates and
has the sole authority to approve any such firm’s fees and other retention and termination terms. |
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● |
Determine
the skills and qualifications in accordance with search criteria required of potential directors, identify, screen potential candidates
and make recommendations to the Board of Directors to fill vacancies on the Board. Full Board approval is required for nominees to
stand for election at the annual meeting of the stockholders. |
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● |
Annually,
evaluate candidates to be nominated to serve on the Board and recommend the slate of nominees to stand for election at the annual
meeting of the stockholders. In evaluating candidates, the committee shall take into account the following: whether a candidate
is independent, relevant experience, leadership qualities, diversity, and ability to represent stockholders. |
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● |
Annually
review and recommend to the Board for approval the appointment of directors to Board committees and the selection of the Chair for
each committee. |
Corporate
Governance
|
● |
Develop
and recommend to the Board for approval a set of corporate governance principles and practices applicable to the company and review
such principles annually and recommend amendments as necessary. |
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Oversee
the evaluation of the Board and its committees, which may include developing and recommending an annual review process. |
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Annually
review the Committee’s Charter to assess adequacy and update and/or amend as appropriate. |
Code
of Ethics
We
have adopted a code of ethics applicable to our principal executive, financial and accounting officers and all persons performing similar
functions. A copy of that code is available on our corporate website at www. http://esportsentertainmentgroup.com/governance-documents.
We expect that any amendments to such code, or any waivers of its requirements, will be disclosed on our website.
Board
Diversity
We
seek diversity in experience, viewpoint, education, skill, and other individual qualities and attributes to be represented on our Board
of Directors. We believe directors should have various qualifications, including individual character and integrity; business experience;
leadership ability; strategic planning skills, ability, and experience; requisite knowledge of our industry and finance, accounting,
and legal matters; communications and interpersonal skills; and the ability and willingness to devote time to our company. We also believe
the skill sets, backgrounds, and qualifications of our directors, taken as a whole, should provide a significant mix of diversity in
personal and professional experience, background, viewpoints, perspectives, knowledge, and abilities. Nominees are not to be discriminated
against on the basis of race, religion, national origin, sex, sexual orientation, disability, or any other basis proscribed by law. The
assessment of prospective directors is made in the context of the perceived needs of our Board of Directors from time to time.
All
of our directors have held high-level positions in business or professional service firms and have experience in dealing with complex
issues. We believe that all our directors are individuals of high character and integrity, are able to work well with others, and have
committed to devote sufficient time to the business and affairs of our company. In addition to these attributes, the description of each
director’s background set forth above indicates the specific qualifications, skills, perspectives, and experience necessary to
conclude that each individual should continue to serve as a director of our company.
Total
Number of Directors |
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5 |
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Female |
|
Male |
|
Non-Binary |
|
Did
Not
Disclose
Gender |
Part
I: Gender Identity |
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Directors |
|
1 |
|
4 |
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Part
II: Demographic Background |
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African
American or Black |
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Alaskan
Native or Native American |
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Asian |
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1 |
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Hispanic
or Latinx |
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Native
Hawaiian or Pacific Islander |
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White |
|
1 |
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3 |
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Two
or More Races or Ethnicities |
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LGBTQ+ |
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Did
Not Disclose Demographic Background |
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|
Board
and Committee Meetings
Our
Board of Directors held twenty formal board meetings, six formal Audit Committee meetings, one formal CNCG Committee meeting and three
formal Compensation Committee meetings during year ended June 30, 2023. Our Board of Directors held eleven formal board meetings and
four formal Audit Committee meetings during year ended June 30, 2022.
Board
Leadership Structure and Board’s Role in Risk Oversight
Our
Board has no policy with respect to the separation of the offices of Chief Executive Officer and Chair of the Board (“Chair”).
It is the Board’s view that rather than having a rigid policy, it, with the advice and assistance of the CNCG Committee, and upon
consideration of all relevant factors and circumstances, will determine, as and when appropriate, whether the two offices should be separate.
The
Company currently does not have a named Lead Independent Director; however, Ms. Jones Blackhurst, since her appointment to the Board
on May 3, 2022, has served in a capacity similar to that of a Lead Independent Director, although has not formally been designated as
such. On December 3, 2022, Ms. Jones Blackhurst was appointed as Chair of the Board of Directors and in this capacity performs the following
activities in providing oversight at the
board-level:
|
● |
setting
of agendas and schedules of Board and Board committee meetings; |
|
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|
● |
scheduling,
setting the agenda for and serving as chair of meetings of independent directors; |
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|
● |
serving
as principal liaison between the independent directors and senior management; |
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|
● |
presiding
at all meetings of the Board including executive sessions of the independent directors; and |
|
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|
● |
ensuring
that she is available for consultation and direct communications on behalf of the independent directors with major stockholders as
appropriate. |
Our
Board plays an active role in the oversight of risks impacting our Company, and the management team is charged with managing such risks.
Our Board works closely with management to ensure that integrity, security and accountability are integrated into our operations. Our
Compensation Committee is responsible for overseeing the management of risks relating to our executive compensation plans and arrangements.
Our Audit Committee oversees the management of financial accounting and regulatory risks and is tasked with focusing on, and analyzing,
risks related to cybersecurity and, for that purpose, receiving reports from management regarding cybersecurity risks and countermeasures
being undertaken or considered by the Company to prevent information security incidents, detect unusual activity, and to be prepared
to respond appropriately should an incident occur. The Nominating and Corporate Governance Committee is responsible for overseeing the
risks associated with the independence of the Board and other corporate governance matters. While each committee is responsible for evaluating
certain risks and overseeing the management of such risks, our full Board is regularly informed regarding such risks through committee
reports and otherwise.
Communications
with the Board
The
Board believes it is important for stockholders and others to have a process to send communications to the Board. Stockholders who wish
to communicate with directors should do so by writing to Attn: Secretary, Esports Entertainment Group, Inc., Block 6, Triq Paceville,
St. Julians, Malta, STJ 3109. The Secretary of the Company reviews all such correspondence and forwards to the Board a summary of all
such correspondence and copies of all correspondence that, in the opinion of the Secretary, deals with the functions of the Board or
Board committees or that she otherwise determines requires their attention. Concerns relating to accounting, internal controls or auditing
matters will be brought to the attention of the Company’s Audit Committee.
Hedging
and Pledging
We
prohibit our officers and directors from hedging and pledging of our securities of the Company. Officers and Directors are prohibited
from (i) engaging in any hedging transactions (including short-selling, options, puts, and calls, as well as derivatives such as swaps,
forwards, and futures transactions) with respect to securities of the Company, and (ii) making or maintaining any pledges of securities
of the Company or otherwise holding securities of the Company in a margin account.
Except
as set forth in our discussion below in “Certain Relationships and Related Transactions,” none of our directors or executive
officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are
required to be disclosed pursuant to the rules and regulations of the SEC.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
For
the year ended June 30, 2023, our named executive officers (“Named Executive Officers” or “NEOs”) were:
|
● |
Alex
Igelman, Chief Executive Officer |
|
● |
Damian
Mathews, Chief Operating Officer and Director |
|
● |
Jennifer
Pace, Chief Human Resources Officer |
|
● |
Lydia
Roy, Group General Counsel, Compliance and Corporate Secretary |
|
● |
Michael
Villani, Chief Financial Officer |
|
● |
John
Brackens, Chief Information Officer and Chief Technology Officer, through May 2023 |
|
● |
Grant
Johnson, Chief Executive Officer, through December 2022 |
The
following table summarizes information concerning the compensation awarded to, earned by, or paid to, our Chief Executive Officer (Principal
Executive Officer or PEO) and our two most highly compensated executive officers other than the Principal Executive Officer during fiscal
years 2023 and 2022 who served in such capacities. We have included the former
Chief Executive Officer and the former Chief Information Officer and Chief Technology Officer, who resigned from their positions during
the year. We also included Damian Mathews, who resigned from his position as Chief Financial Officer and Chief Operating Officer on December
31, 2022 and later rejoined the Company as the Chief Operating Officer on May 29, 2023.
Name and
Principal Position | |
Year | | |
Salary ($)
| | |
Bonus | | |
Stock Awards
($)(1) | | |
Option Awards
($)(1) | | |
Other Annual Compensation
($) | | |
All
Other Compensation ($) | | |
Total ($) | |
Alex Igelman, | |
| 2023 | | |
$ | 150,000 | | |
| — | | |
| 184,000 | | |
| 84,312 | | |
| — | | |
| — | | |
$ | 418,312 | |
Chief Executive Officer (2) | |
| 2022 | | |
$ | — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | — | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Damian Mathews, | |
| 2023 | | |
$ | 173,334 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 173,334 | |
Chief Operating Officer and
former Chief Financial Officer (3) | |
| 2022 | | |
$ | 68,811 | | |
| — | | |
| 142,400 | | |
| 160,054 | | |
| — | | |
| 11,500 | | |
$ | 382,765 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Lydia Roy, | |
| 2023 | | |
$ | 250,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 250,000 | |
Group General Counsel, Compliance
and Corporate Secretary (4) | |
| 2022 | | |
$ | 205,000 | | |
| — | | |
| — | | |
| 107,769 | | |
| — | | |
| — | | |
$ | 312,769 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Michael Villani, | |
| 2023 | | |
$ | 227,500 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 227,500 | |
Chief Financial Officer (5) | |
| 2022 | | |
$ | 205,000 | | |
| — | | |
| — | | |
| 106,702 | | |
| — | | |
| — | | |
$ | 311,702 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
John Brackens, | |
| 2023 | | |
$ | 175,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 66,667 | | |
$ | 241,667 | |
Former Chief Information Officer
and Chief Technology Officer (6) | |
| 2022 | | |
$ | 200,000 | | |
| — | | |
| — | | |
| 164,321 | | |
| — | | |
| — | | |
$ | 364,321 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Grant Johnson, | |
| 2023 | | |
$ | 125,000 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
$ | 125,000 | |
Former Chief Executive Officer
and President (7) | |
| 2022 | | |
$ | 300,000 | | |
| — | | |
| — | | |
| 164,321 | | |
| — | | |
| 14,800 | | |
$ | 479,121 | |
(1) |
For
awards of stock and options, the aggregate grant date fair value was computed in accordance with ASC 718 on the date of grant. |
(2) |
Mr.
Igelman has an annual salary of $300,000. Mr. Igelman was appointed Chief Executive Officer of the Company on January 3, 2023. In
connection with his appointment, he received inducement equity awards outside the Company’s Esports Entertainment Group, Inc.
2020 Equity Incentive Plan in accordance with Nasdaq Listing Rule 5635(c)(4). Mr. Igelman was granted an award of 63 shares of common
stock at a $2,920.63 grant price per share and an award of 63 time-based stock options at a $1,338.29 grant date fair value
per share on January 3, 2023. |
|
|
(3) |
Mr.
Mathews has an annual salary of $280,000 following his appointment as Chief Operating Officer on May 29, 2023. Previously, Mr. Mathews
earned a salary of $300,000 in his role as Chief Financial Officer and Chief Operating Officer until his resignation from those positions
on December 31, 2022. During the year ended June 30, 2022, and in connection with his appointment as Chief Financial Officer on April
4, 2022, Mr. Mathews was issued 5 shares of Common Stock at a $28,480 grant price. As part of his role as non-executive director
Mr. Mathews received director fees of $11,500 and was issued 1 stock option at a $160,054 fair value grant price during the year
ended June 30, 2022. |
(4) |
Ms.
Roy has an annual salary of $250,000. Ms. Roy was appointed Group General Counsel, Compliance and Corporate Secretary for the Company
from February 2022. Ms. Roy joined the Company in 2021 as Head of Legal, Esports. During the year ended June 30, 2022, Ms. Roy was
issued 1 stock option at a $107,769 fair value grant price. |
|
|
(5) |
Mr.
Villani has an annual salary of $227,500 during the year ended June 2023 and $205,000 during the year ended June 30, 2022. Mr. Villani
was appointed Interim Chief Financial Officer and Financial Controller on January 6, 2023 and subsequently as permanent Chief Financial
Officer on August 29, 2023. During the year ended June 30, 2022, Mr. Villani was issued 1 stock option at $106,702
fair value grant price. |
|
|
(6) |
Mr.
Brackens had an annual salary of approximately $200,000. Mr. John Brackens served as the Company’s Chief Information Officer
(CIO) and Chief Technology Officer (CTO) from September 20, 2019 to May 15, 2023. During the year ended June 30, 2022, Mr. Brackens
was issued 1 stock option at $164,321 fair value grant price. |
|
|
(7) |
Mr.
Johnson had an annual salary of $300,000. During the year ended June 30, 2022, Mr. Johnson was issued 1 stock option at $164,321
fair value grant price. All other compensation includes $4,800 for office rent reimbursement and $10,000 for car allowance. |
Employment
Agreements
Alex
Igelman
On
December 23, 2022, Esports Entertainment Group, Inc. (the “Company”) announced the appointment of Alex Igelman as Chief Executive
Officer, effective January 3, 2023. Mr. Igelman joins the Company with more than 30 years of experience in the gaming industry. He is
a gaming lawyer and the co-founder of FairP2P and Esports Capital Corp., entities which have been leaders in their respective sectors.
During his career, Mr. Igelman worked across the gambling and gaming industry in a variety of senior leadership positions.
In
connection with Mr. Igelman’s appointment as Chief Executive Officer, Mr. Igelman and the Company entered into an employment agreement
(the “Agreement”) on December 22, 2022, which provides for a base salary of $300,000 and the grant of common stock and stock
options. These stock awards are being granted as inducement equity awards outside the Company’s Esports Entertainment Group, Inc.
2020 Equity Incentive Plan in accordance with Nasdaq Listing Rule 5635(c)(4). Pursuant to the terms of the Agreement, subject to the
commencement of his employment, the Company will grant Mr. Igelman an award of 25,000 shares of common stock and an award of 25,000 time-based
stock options. Mr. Igelman’s shares of common stock may not be sold or transferred until the six-month anniversary of the date
of grant. Mr. Igelman’s stock options will vest in equal quarterly installments over a one-year period subject to his continued
employment with the Company on the applicable vesting dates. The stock awards are subject to the terms of an award agreement outlining
the specific terms of the stock awards. Mr. Igelman may also participate in the executive stock option plan consistent with other C-level
officers. Mr. Igelman is eligible to earn an annual bonus of 50% of his base salary, subject to satisfaction of goals and objectives
to be set each year by the Board of Directors (the “Board”).
The
Agreement is at-will and either the Company or Mr. Igelman may terminate the employment at any time for any reason or no reason with
90 days advanced written notice. Upon termination of Mr. Igelman’s employment because of disability, the Company shall pay or provide
Mr. Igelman, subject to continued compliance with applicable restrictive covenants, (i) any unpaid base fee and any accrued vacation
through the date of termination; (ii) any unpaid annual bonus accrued with respect to the fiscal year ending on or preceding the date
of termination; (iii) reimbursement for any unreimbursed expenses properly incurred through the date of termination; and (iv) any accrued
benefits. Upon the termination of Mr. Igelman’s employment because of death, Mr. Igelman’s estate shall be entitled to any
accrued benefits. Upon the termination of Mr. Igelman’s employment by the Company for cause or by either party in connection with
a failure to renew the employment agreement, subject to continued compliance with applicable restrictive covenants, the Company shall
pay Mr. Igelman any accrued benefits.
Damian
Mathews
On
May 29, 2023, the Company entered into an agreement with agreement with Mr. Mathews to serve as the Company’s Chief Operating Officer.
Mr. Mathews salary is approximately $280,000 per annum paid in monthly payments in NZD. The employment agreement with Mr. Mathews is
for one year and is automatically extended for an additional one year term unless the Company or Mr. Mathews provides written notice
within 60 days notice prior to the end of the current employment term. Mr. Mathews is eligible to earn an annual employee stock option
bonus in such amount, if any, as determined in the sole discretion of the Board. Mr. Mathews participates in the executive stock option
plan consistent with other C-level officers. The employment agreement with Mr. Mathews may be terminated with or without cause. Upon
termination Mr. Mathews’ employment because of disability, the Company shall pay or provide Mr. Mathews (i) any unpaid base fee
and any accrued vacation through the date of termination; (ii) any unpaid annual bonus accrued with respect to the fiscal year ending
on or preceding the date of termination; (iii) reimbursement for any unreimbursed expenses properly incurred through the date of termination;
and (iv) any Accrued Benefits. Upon the termination of Mr. Mathews’ employment because of death, Mr. Mathews’ estate shall
be entitled to any Accrued Benefits. Upon the termination of Mr. Mathews’ employment by the Company for cause or by either party
in connection with a failure to renew the employment agreement, the Company shall pay Mr. Mathews any Accrued Benefits.
Lydia
Roy
On
February 7, 2022, the Company appointed Ms. Roy Group General Counsel, Compliance and Corporate Secretary. In connection with the appointment,
Ms. Roy received a base salary of $250,000. The employment agreement with Ms. Roy is for one year and is automatically extended for an
additional one-year term unless the Company or Ms. Roy provides written notice within 60 days notice prior to the end of the current
employment term. Ms. Roy is eligible to earn an annual employee stock option bonus in such amount, if any, as determined in the sole
discretion of the Board. Ms. Roy is also eligible to participate in the executive stock option plan consistent with other executive officers.
The employment agreement with Ms. Roy may be terminated with or without cause. Upon termination Ms. Roy’s employment because of
disability, the Company shall pay or provide Ms. Roy (i) any unpaid base fee and any accrued vacation through the date of termination;
(ii) any unpaid annual bonus accrued with respect to the fiscal year ending on or preceding the date of termination; (iii) reimbursement
for any unreimbursed expenses properly incurred through the date of termination; and (iv) any Accrued Benefits. Upon the termination
of Ms. Roy’s employment because of death, Ms. Roy’s estate shall be entitled to any Accrued Benefits. Upon the termination
of Ms. Roy’s employment by the Company for cause or by either party in connection with a failure to renew the employment agreement,
the Company shall pay Ms. Roy any Accrued Benefits.
Michael
Villani
Effective
August 29, 2023, Esports Entertainment Group, Inc. (the “Company”) announced the appointment of Michael Villani, 47, as the
permanent Chief Financial Officer, from his previous role as Interim Chief Financial Officer and Financial Controller. Mr. Villani serves
as the Company’s Principal Financial Officer. In connection with Mr. Villani’s appointment as the Chief Financial Officer,
Mr. Villani and the Company entered into an employment agreement (the “Agreement”) on August 29, 2023, which provides for
a base salary of $250,000. Mr. Villani may also participate in the executive stock option plan consistent with other C-level officers.
Mr. Villani is eligible to earn an annual discretionary bonus, subject to satisfaction of goals and objectives to be set each year by
the Board.
The
Agreement is at-will and either the Company or Mr. Villani may terminate the employment at any time, with or without Cause (as defined
in the Agreement), or for any or no Cause, with 90 days advance written notice required to be provided by Mr. Villani to the Company.
Upon termination of Mr. Villani’s employment, other than for Cause, the Company shall pay or provide Mr. Villani, subject to continued
compliance with applicable restrictive covenants, three months’ salary continuation to be paid in accordance with the Company’s
payroll practices.
Outstanding
Equity Awards at June 30, 2023
The
following table summarizes the outstanding equity award holdings held by our named executive officers and directors as of June 30, 2023.
The shares issuable upon exercise of options as well as the option exercise price have been adjusted for the one-hundred-to-one reverse
split completed by the Company on February 22, 2023.
Name | |
Grant
date | |
Shares
issuable upon exercise of options | | |
Option
exercise price ($) | | |
Option
expiration date |
Non-Executive Directors: | |
| |
| | | |
| | | |
|
Alan Alden, | |
October 8, 2020 | |
| 1 | | |
$ | 192,800 | | |
January 7, 2026 |
Director (1) | |
October 1, 2021 | |
| 1 | | |
$ | 268,400 | | |
October 1, 2026 |
Jan Jones Blackhurst | |
N/A | |
| — | | |
| — | | |
N/A |
Director and Chair of the Board (2) | |
| |
| | | |
| | | |
|
Chul Wong Lim, | |
October 8, 2020 | |
| 1 | | |
$ | 192,800 | | |
January 7, 2026 |
Director (3) | |
October 1, 2021 | |
| 1 | | |
$ | 268,400 | | |
October 1, 2026 |
Robert Soper, | |
N/A | |
| — | | |
| — | | |
N/A |
Director (4) | |
| |
| | | |
| | | |
|
Named-Executive Officers: | |
| |
| | | |
| | | |
|
Alex Igelman, | |
January 3, 2023 | |
| 63 | | |
$ | 2,944 | | |
January 3, 2033 |
Chief Executive Officer (5) | |
| |
| | | |
| | | |
|
Damian Mathews, | |
October 8, 2020 | |
| 1 | | |
$ | 192,800 | | |
January 7, 2026 |
Chief Operating Officer and Director (6) | |
October 1, 2021 | |
| 1 | | |
$ | 268,400 | | |
October 1, 2026 |
Jennifer Pace, | |
October 8, 2020 | |
| 1 | | |
$ | 192,800 | | |
January 7, 2026 |
Chief People Officer (7) | |
October 1, 2021 | |
| 1 | | |
$ | 268,400 | | |
October 1, 2026 |
Lydia Roy, | |
October 1, 2021 | |
| 1 | | |
$ | 268,400 | | |
October 1, 2026 |
Group General Counsel, Compliance and Corporate
Secretary (8) | |
| |
| | | |
| | | |
|
Michael Villani, | |
October 1, 2021 | |
| 1 | | |
$ | 268,400 | | |
October 1, 2026 |
Chief Financial Officer (9) | |
| |
| | | |
| | | |
|
(1) |
Mr.
Alden was appointed as a Non-Executive Director of Esports Entertainment Group, Inc. and Chair of the Compensation Committee from
October 1, 2020. |
|
|
(2) |
Ms.
Jones Blackhurst was appointed as Non-Executive Director of Esports Entertainment Group, Inc. from May 3, 2022 and as Chair of the
Board of Director from December 3, 2022. Ms. Jones Blackhurst has not been issued stock or options in connection with her appointments
at the Company. |
|
|
(3) |
Mr.
Lim was appointed as a Non-Executive Director of Esports Entertainment Group, Inc. and a member of the Compensation Committee from
October 1, 2020. |
|
|
(4) |
Mr.
Soper was appointed as a Non-Executive Director of Esports Entertainment Group, Inc. from June 6, 2023. Mr. Soper has not been issued
stock or options in connection with his appointment at the Company. |
|
|
(5) |
Mr.
Igelman was appointed Chief Executive Officer of the Company from January 3, 2023. Mr. Igelman received the options in connection
with his appointment. |
|
|
(6) |
Mr.
Mathews was appointed as a Non-Executive Director of Esports Entertainment Group, Inc. and Chair of the Audit Committee from October
1, 2020. Mr. Mathews resigned from his role as Non-Executive Director on appointment as Chief Financial Officer on April 2, 2022
and as an Executive Directory. Mr. Mathews also took on the role of Chief Operating Officer on June 1, 2022. Mr. Mathews resigned
from his role as Chief Financial Officer and Chief Operating Officer on December 31, 2022 and rejoined the Company as Chief Operating
Officer from May 29, 2023. Mr. Mathews remained on the Board of Directors throughout the year and continues to serve as director
in addition to his Chief Operating Officer role. |
(7) |
Ms.
Pace was appointed Chief People Officer of the Company from September 1, 2022. |
|
|
(8) |
Ms.
Roy was appointed Group General Counsel, Compliance and Corporate Secretary of the Company from February 7, 2022. |
|
|
(9) |
Mr.
Villani was appointed Interim Chief Financial Officer and Financial Controller on January 6, 2023 and subsequently as permanent Chief
Financial Officer on August 29, 2023. |
Stock
Incentive Plans
On
September 10, 2020, the Board adopted the 2020 Equity and Incentive Plan (the “2020 Plan”) that provides for the issuance
of incentive and non-qualified stock options, restricted stock, restricted stock units and stock appreciation rights to officers, employees,
directors, consultants, and other key persons. Under the 2020 Plan, the maximum number of shares of Common Stock authorized for issuance
was 38 shares. Each year on January 1, for a period of up to nine years, the maximum number of shares authorized for issuance under the
2020 Plan is automatically increased by 6 shares. At June 30, 2023, there was a maximum of 56 shares of Common Stock authorized for issuance
under the 2020 Plan. There were no additional equity awards eligible for issuance from the 2017 Stock Incentive Plan that had been adopted
by the Company on August 1, 2017. The outstanding stock options granted under the 2017 Stock Incentive Plan were transferred to the 2020
Plan. As of June 30, 2023, there were 41 shares of Common Stock available for future issuance under the 2020 Plan. On January 3, 2023,
the Company issued an award of 63 time-based stock options to the Chief Executive Officer with an exercise price of $2,944 per option
outside of the 2020 Plan. The Chief Executive Officer’s stock options will vest in equal quarterly installments over a one-year
period subject to his continued employment with the Company on the applicable vesting dates.
Incentive
Stock Options
All
of our employees are eligible to be granted Incentive Stock Options pursuant to the 2020 Plan as may be determined by our Board which
administers the Plan.
Options
granted pursuant to the 2020 Plan terminate at such time as may be specified when the option is granted.
The
total fair market value of the shares of Common Stock (determined at the time of the grant of the option) for which any employee may
be granted options which are first exercisable in any calendar year may not exceed $100,000.
In
the discretion of the Board, options granted pursuant to the 2020 Plan may include installment exercise terms for any option such that
the option becomes fully exercisable in a series of cumulating portions. The Board may also accelerate the date upon which any option
(or any part of any option) is first exercisable. However, no option, or any portion thereof may be exercisable until one year following
the date of grant. In no event shall an option granted to an employee then owning more than l0% of our Common Stock be exercisable by
its terms after the expiration of five years from the date of grant, nor shall any other option granted pursuant to 2020 Plan be exercisable
by its terms after the expiration of ten years from the date of grant.
Non-Qualified
Stock Options
Our
employees, directors and officers, and consultants or advisors are eligible to be granted Non-Qualified Stock Options pursuant to 2020
Plan as may be determined by our Board which administers the Plan, provided however that bona fide services must be rendered by such
consultants or advisors and such services must not be in connection with a capital-raising transaction or promoting our Common Stock.
Options
granted pursuant to 2020 Plan terminate at such time as may be specified when the option is granted.
In
the discretion of the Board options granted pursuant to the Plan may include instalment exercise terms for any option such that the option
becomes fully exercisable in a series of cumulating portions. The Board may also accelerate the date upon which any option (or any part
of any option) is first exercisable. In no event shall an option be exercisable by its terms after the expiration of ten years from the
date of grant.
Stock
Bonuses
Our
employees, directors and officers, and consultants or advisors are eligible to receive a grant of our shares, provided however that bona
fide services must be rendered by such consultants or advisors and such services must not be in connection with a capital-raising transaction
or promoting our Common Stock. The grant of the shares rests entirely with our Board which administers the Plan. It is also left to the
Board to decide the type of vesting and transfer restrictions which will be placed on the shares.
Employee
Pension, Profit Sharing or other Retirement Plan
We
do not have a defined benefit, pension plan, profit sharing or other retirement plan, although we may adopt one or more of such plans
in the future.
Pay
vs. Performance
As
required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, the following
disclosure (the “Pay Versus Performance Disclosure”) describes the relationship between executive compensation and the Company’s
performance with respect to select financial measures.
| |
| | |
| | |
| | |
| | |
| | |
| | |
Value of Initial Fixed $100 Investment Based On: | | |
| |
Year | |
Summary Compensation Table
Total for PEO (1) | | |
Compensation Actually Paid
to PEO (2) | | |
Summary Compensation Table
Total for PEO-2 (1) | | |
Compensation Actually Paid
to PEO-2 (2) | | |
Average Summary Compensation
Table Total for Non-PEO NEOs (1) | | |
Average Compensation Actually
Paid to Non-PEO NEOs (2) | | |
Total Stockholder Return | | |
Net Loss | |
2023 | |
$ | 418,312 | | |
$ | 320,899 | | |
$ | 125,000 | | |
$ | 84,042 | | |
$ | 209,940 | | |
$ | 175,099 | | |
$ | 0.11 | | |
$ | (32,285,479 | ) |
2022 | |
$ | - | | |
$ | - | | |
$ | 479,121 | | |
$ | 206,267 | | |
$ | 328,798 | | |
$ | 102,487 | | |
$ | 3.78 | | |
$ | (102,232,090 | ) |
(1)
|
The
NEOs for each year presented above are comprised of the following: 2023: Alex Igelman, who is currently and was the Company’s
Principal Executive Officer (the “PEO”) from January 3, 2022 and Grant Johnson, who was the Company’s PEO
(“PEO-2) during the fiscal period starting July 1, 2022 through December 3, 2022, and Michael Villani, Damian Mathews,
Jennifer Pace, Lydia Roy and John Brackens (collectively, the “non-PEO NEOs”). 2022: Grant Johnson, who was the
Company’s PEO during the fiscal period starting July 1, 2021 through June 30, 2022, and Michael Villani, Damian
Mathews, Jennifer Pace, Lydia Roy and John Brackens (collectively, the “non-PEO NEOs”). |
(2)
|
SEC
rules require that certain adjustments be made to the totals set forth in the Summary Compensation Table included in this Proxy Statement
(the “Summary Compensation Table”) in order to determine “compensation actually paid” for purposes of this
Pay Versus Performance Disclosure. “Compensation actually paid” does not represent cash and/or equity value transferred
to the applicable NEO, but rather is a value calculated under applicable SEC rules for purposes of this Pay Versus Performance Disclosure.
In general, “compensation actually paid” is calculated as total compensation set forth in the Summary Compensation Table,
as adjusted to include the fair market value of equity awards as of June 30 of the applicable year or, if earlier, the vesting date
(rather than the grant date). None of the NEOs participate in a defined benefit plan, so the following table does not include an adjustment
for pension benefits. The below table reflects the required adjustments to reconcile total compensation as set forth in the Summary
Compensation Table to “Compensation actually paid” for purposes of the Pay Versus Performance Disclosure. |
Year | |
NEO(s) | |
Summary Compensation Table Total | | |
Subtract Stock Awards(a) | | |
Add Year-End Granted Award Fair Value(b) | | |
Change in Value of Prior Awards(c) | | |
Value of Awards Granted and Vested in Same Year(d) | | |
Change in Value of Prior Awards that Vested in Year(e) | | |
Compensation Actually Paid | |
2023 | |
PEO | |
$ | 418,312 | | |
$ | (268,312 | ) | |
$ | 11,870 | | |
| - | | |
| $159,029 | | |
$ | - | | |
$ | 320,899 | |
| |
PEO (Former) | |
| 125,000 | | |
| - | | |
| - | | |
| - | | |
| - | | |
| (40,958 | ) | |
| 84,042 | |
| |
Total PEO (Current/Former) | |
| 543,312 | | |
| (268,312 | ) | |
| 11,870 | | |
| - | | |
| 159,029 | | |
| (40,958 | ) | |
| 404,941 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Average of Non-PEO NEOs | |
$ | 209,940.00 | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | (34,841 | ) | |
$ | 175,099 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
2022 | |
PEO | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | | |
$ | - | |
| |
PEO (Former) | |
| 479,121 | | |
| (164,321 | ) | |
| 1,119 | | |
| - | | |
| (99,671 | ) | |
| (9,981 | ) | |
| 206,267 | |
| |
Total PEO (Current/Former) | |
| 479,121 | | |
| (164,321 | ) | |
| 1,119 | | |
| - | | |
| (99,671 | ) | |
| (9,981 | ) | |
| 206,267 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
| |
Average of Non-PEO NEOs | |
$ | 328,798 | | |
$ | (168,260 | ) | |
$ | 916 | | |
$ | - | | |
$ | (56,305 | ) | |
$ | (2,662 | ) | |
$ | 102,487 | |
(a)
|
Deduction
for the amounts reported in the “Stock Awards” and “Option Awards” columns of the Summary Compensation Table. |
(b)
|
Fair value, calculated in accordance with FASB ASC 718, as of the end of the reported fiscal year of equity awards granted in the
reported fiscal year that were outstanding and unvested as of the end of the reported fiscal year. |
(c)
|
Change
in fair value, calculated in accordance with FASB ASC 718, as of the end of the reported fiscal year from the end of the prior fiscal
year, of equity awards granted in prior years that are outstanding and unvested as of the end of the reported fiscal year. |
(d)
|
Fair value, calculated in accordance with FASB ASC 718, as of the vesting date for awards that are granted and vest in the same
reported fiscal year. |
(e)
|
Change
in fair value, calculated in accordance with FASB ASC 718, from the end of the prior fiscal year to the vesting date for awards granted
in prior years that vest in the reported year. |
Relationships
Between Executive Compensation Actually Paid and Select Financial Performance Measures
The
charts below are based on the information provided in the above table to illustrate the relationships between the Company’s compensation
actually paid to the PEO and the average compensation actually paid to the Company’s non-PEO NEOs, with (i) the Company’s
cumulative total stockholder return, and (ii) the Company’s net income (loss) to link compensation actually paid to its NEOs for
the most recently completed fiscal year and its performance.
Directors’
Compensation
During
the fiscal year ended June 30, 2023, the Non-Executive Directors deferred certain cash payments to repurpose resources to operational
matters of the Company. The table below shows the compensation paid to our non-executive directors during the year ended June 30, 2023.
Name | |
Year | | |
Fees
Earned or Paid in Cash | | |
Stock
Awards(1) | | |
Option
Awards(2) | | |
Total | |
Chul Woong Lim (3) | |
| 2023 | | |
$ | 10,000 | | |
$ | — | | |
$ | — | | |
$ | 10,000 | |
Alan Alden (4) | |
| 2023 | | |
$ | 5,000 | | |
$ | — | | |
$ | — | | |
$ | 5,000 | |
Damian Mathews (5) | |
| 2023 | | |
$ | 2,500 | | |
$ | — | | |
$ | — | | |
$ | 2,500 | |
Jan Jones Blackhurst (6) | |
| 2023 | | |
$ | — | | |
$ | — | | |
$ | — | | |
$ | — | |
Kaitesi Munroe (7) | |
| 2023 | | |
$ | 10,000 | | |
$ | — | | |
$ | — | | |
$ | 10,000 | |
Robert Soper (8) | |
| 2023 | | |
$ | — | | |
| — | | |
$ | — | | |
$ | — | |
(1) |
The
fair value of stock issued for services computed in accordance with ASC 718 on the date of grant. |
(2) |
The
fair value of options granted computed in accordance with ASC 718 on the date of grant. |
(3) |
Mr.
Lim was appointed as a Non-Executive Director of Esports Entertainment Group, Inc. and a member of the Compensation Committee (now
CNCG Committee) as from October 1, 2020. Mr. Lim was appointed to the Audit Committee effective May 3, 2022. |
(4) |
Mr.
Alden was appointed as a Non-Executive Director of Esports Entertainment Group, Inc. as from October 1, 2020. Mr. Alden was appointed
to the Nominating and Governance Committee (now CNCG Committee) and as Chair of the Audit Committee on June 1, 2022. |
(5) |
Mr.
Mathews was appointed as a Non-Executive Director of Esports Entertainment Group, Inc. and Chair of the Audit Committee as from October
1, 2020. Mr. Mathews resigned from his role as Non-Executive Director on appointment as Chief Financial Officer on April 2, 2022
and as an Executive Director. Mr. Mathews also took on the role of Chief Operating Officer on June 1, 2022. Mr. Mathews resigned
from his role as Chief Financial Officer and Chief Operating Officer on December 31, 2022 and rejoined the Company as Chief Operating
Officer from May 29, 2023. Mr. Mathews remained on the Board of Directors throughout the year and continues to serve as director
in addition to his Chief Operating Officer role. |
(6) |
Ms.
Jones Blackhurst was appointed as a Non-Executive Director of Esports Entertainment Group, Inc. from May 3, 2022. Ms. Jones Blackhurst
was appointed to the Audit committee effective May 3, 2022, as Chair of the Compensation Committee and as Chair of the Nominating
and Governance committee (both now the CNCG Committee) effective May 25, 2022. |
(7) |
Ms.
Munroe was appointed as a Non-Executive Director of Esports Entertainment Group, Inc from May 17, 2022. Ms. Munroe was appointed
to the Compensation Committee, Nominating and Governance Committee effective June 1, 2022. Ms. Munroe resigned from her position
on October 17, 2022. |
(8) |
Mr.
Soper was appointed as a Non-Executive Director of Esports Entertainment Group, Inc. from June 6, 2023. Mr. Soper did not receive
any payments during the year ended June 30, 2023. |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding our voting shares beneficially owned as of December 31, 2023 and is based on
1,065,042 shares of common stock issued and outstanding, for (i) each stockholder known to be the beneficial owner of 5% or more of our
outstanding shares of common stock, (ii) each named executive officer and director, and (iii) all executive officers and directors as
a group. A person is considered to beneficially own any shares: (i) over which such person, directly or indirectly, exercises sole or
shared voting or investment power, or (ii) of which such person has the right to acquire beneficial ownership at any time within 60 days
through an exercise of stock options or warrants. Unless otherwise indicated, voting and investment power relating to the shares shown
in the table for our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the owner’s
spouse or children.
For
purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common stock
that such person has the right to acquire within 60 days of December 31, 2023. For purposes of computing the percentage of outstanding
shares of our common stock held by each person or group of persons, any shares that such person or persons has the right to acquire within
60 days of December 31, 2023, is deemed to be outstanding, but is not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person. The inclusion herein of any shares listed as beneficially owned does not constitute an admission of beneficial
ownership. Unless otherwise indicated, each of the stockholders named in the table below, or his or her family members, has sole voting
and investment power with respect to such shares of our common stock. Except as otherwise indicated, the address of each of the stockholders
listed below is: Block 6, Triq Paceville, St. Julians, Malta, STJ 3109.
The
following shows the stock ownership of our named executive officers, directors, and any persons known to us who owns more than 5% of
our common stock as of December 31, 2023.
Name
and Address of Beneficial Owner | |
| | |
Amount
and nature of beneficial ownership (9) | | |
Percent
of
class (9) | |
Alex Igelman 16 Calvin Chambers
Road, Thornhill, Ontario, Canada, L4J 1E7 | |
| (1) | | |
| 126 | | |
| * | |
Michael Villani 84 Festival Court, White
Plains, New York 10603 | |
| (2) | | |
| 2 | | |
| * | |
Damian Mathews 69 De Luen Avenue Tindalls
Beach, Whangaparaoa Auckland 0930 | |
| (3) | | |
| 9 | | |
| * | |
Lydia Roy 9595 Highland Pointe Pass, Delray
Beach, Florida 33446 | |
| (4) | | |
| 1 | | |
| * | |
Jenny Pace Block 6, Triq Paceville, St. Julians
01 STJ3109 | |
| (5) | | |
| 3 | | |
| * | |
Alan Alden 202, Yucca, Swieqi Road Swieqi,
SWQ 3454, Malta | |
| (6) | | |
| 3 | | |
| * | |
Jan Jones Blackhurst 100 West
Liberty Street, 12th Floor Reno, NV, 89501 | |
| | | |
| - | | |
| * | |
Chul Woong Lim 204-804 Susaek Rd. 100
Seodaemun-gu Seoul, Korea | |
| (7) | | |
| 5 | | |
| * | |
Robert
Soper 3061 NW 125th Ave., Sunrise, Florida 33323 | |
| | | |
| - | | |
| * | |
Former Named Executive
Officers (4 individuals) | |
| (8) | | |
| 94 | | |
| * | |
All
Executive Officers and Directors as a group | |
| | | |
| 243 | | |
| * | % |
* |
less
than 1% |
|
|
(1) |
Includes
63 options to purchase shares of common stock currently exercisable. |
(2) |
Includes
1 options to purchase shares of common stock currently exercisable. |
|
|
(3) |
Includes
2 options to purchase shares of common stock currently exercisable. |
|
|
(4) |
Includes
1 option to purchase shares of common stock currently exercisable. |
|
|
(5) |
Includes
2 options to purchase shares of common stock currently exercisable. |
|
|
(6) |
Includes
2 options to purchase shares of common stock currently exercisable. |
|
|
(7) |
Includes
2 options to purchase shares of common stock currently exercisable. |
|
|
(8) |
Includes
86 shares of common stock for the former Chief Executive Officer. Also, includes 3 shares of common stock for the former Chief Financial
Officer, 2 shares of common stock for the former Chief Information Officer and Chief Technology Officer, and 3 shares of common stock
for the former Chief Operating Officer, based on the most recently available information to the Company. |
|
|
(8) |
Excludes
the voting shares of Common Stock underlying the outstanding Series E Preferred Stock held by a member of management of the Company
that is counted towards the quorum for the Annual Meeting and is voted proportionately with the outstanding shares of Common Stock
for Proposal No. 5. |
TRANSACTIONS
WITH RELATED PERSONS
Under
our written Related Party Transactions Policy, our Group General Counsel, Compliance and Corporate Secretary will review any potential
Related Party Transaction to determine if it is subject to the policy. If the Group General Counsel, Compliance and Corporate Secretary
determines that it is subject to the policy, the transaction will be referred to our Audit Committee for approval or ratification. Our
Company’s policy with regard to related party transactions is for the Audit Committee of the Board to approve any material transactions
involving our directors, executive officers or holders of more than 5% of our outstanding capital stock.
Fiscal
Years Ended June 30, 2023 and 2022
The
Company’s Chief Executive Officer owns less than 5% of Oddin.gg, a vendor of the Company, that was owed $47,895 and $3,359 by the
Company as of June 30, 2023 and 2022, respectively. The Company incurred cost of revenue to Oddin.gg of $72,107 and $52,791 for years
ended June 30, 2023 and 2022. On October 3, 2023, the Company signed an agreement to integrate the Oddin.gg esports iFrame solution that
will allow the Company to offer esports wagering to its iGaming customers. The integration of the Oddin.gg’s esports iFrame solution
is expected to be completed by the Company in the first half of fiscal 2024. The agreement requires the Company to pay Oddin.gg a revenue
share based on the net gaming revenues generated from esports wagering.
On
October 26, 2023, the Company signed a binding letter of intent to acquire a 30% minority interest, in furtherance of strategic collaboration
and revenue sharing agreement with Drafted.gg, a leading wagerable esports content producer based in Czech Republic. The Company expects
to purchase the remaining 70% of the business by the end of the fiscal year. The purchase price for the initial 30% minority interest
is $300,000. The Company’s Chief Executive Officer has an indirect immaterial interest in Drafted.gg.
The
Company reimbursed the former Chief Executive Officer for office rent and related expenses. The Company incurred charges owed to the
former Chief Executive Officer for office expense reimbursement of $2,400 and $4,800 for the years ended June 30, 2023 and 2022, respectively.
As of June 30, 2023 and 2022, there were no amounts payable to the former Chief Executive Officer. The former Chief Executive Officer
was terminated for cause by the Board from his position as Chief Executive Officer on December 3, 2022. The former Chief Executive Officer
resigned from the Board on December 23, 2022.
On
May 4, 2017, the Company entered into a services agreement and a referral agreement with Contact Advisory Services Ltd., an entity that
is partly owned by a member of the Board. The Company incurred general and administrative expenses of $18,521 and $26,148 for years ended
June 30, 2023 and 2022, respectively, in accordance with these agreements. As of June 30, 2023 and 2022, there was approximately $12,700
and $0 amounts payable to Contact Advisory Services Ltd, respectively.
The
Company had retained services from a former member of its Board who remained as an advisor to the Company with an annual fee of $60,000.
The member was previously retained through a consultancy agreement dated August 1, 2020 and an employment agreement dated June 15, 2020.
The consultancy agreement required payments of £18,000 ($21,920 translated using the exchange rate in effect at June 30, 2022)
per month to the firm that is controlled by this member of the Board. The individual also received payroll of $500 per month through
the employment agreement as Chief Operating Officer. The member resigned from the Board and from his role as Chief Operating Officer
on May 31, 2022 and the consultancy agreement and the employment agreement were terminated.
The
Company retained the services of its former Chief Financial Officer and Chief Operating Officer through a consultancy agreement dated
April 2, 2022 and an employment agreement dated April 2, 2022. The Company remitted monthly payments to its former Chief Financial Officer
of NZD 36,995 ($23,524 translated using the exchange rate in effect at June 30, 2022) under the consultancy agreement and $500 per month
under the employment agreement. In connection with this appointment the Company provided a one-time issuance of 5 shares of Common Stock
to the former Chief Financial Officer and Chief Operating Officer. The former Chief Financial Officer and Chief Operating Officer resigned
from his roles on December 31, 2022, and the consultancy agreement and employment agreement were terminated. He later rejoined the Company
as the Chief Operating Officer on May 29, 2023 under a new employment agreement.
During
the year ended June 30, 2022, the Company engaged in transactions with Tilt, LLC a game center operator controlled by the head of GGC.
This included net sales to Tilt, LLC in the amount of $222,559 for game center equipment, and amounts paid to Tilt, LLC of $33,600 for
equipment leased, $16,589 for services, $20,128 for cryptocurrency mining and $140,000 for purchases of computer inventory. The individual
was no longer employed by the Company during the year ended June 30, 2023.
AUDIT-RELATED
MATTERS
Audit
Committee Report
The
Audit Committee of the Board is comprised of independent directors and operates under a written charter adopted by the Board. The Audit
Committee Charter is reviewed and updated as needed per applicable rules of the SEC and The Nasdaq Stock Market.
The
Audit Committee serves in an oversight capacity. Management is responsible for the Company’s internal controls over financial reporting.
The independent auditors are responsible for performing an independent audit of the Company’s financial statements per the standards
of the Public Company Accounting Oversight Board (“PCAOB”) and issuing a report thereon. The Audit Committee’s primary
responsibility is to monitor and oversee these processes and to select and retain the Company’s independent auditors. In fulfilling
its oversight responsibilities, the Audit Committee reviewed with management the Company’s audited financial statements and discussed
not only the acceptability but also the quality of the accounting principles, the reasonableness of the significant judgments and estimates,
critical accounting policies, and the clarity of disclosures in the audited financial statements prior to issuance.
The
Audit Committee reviewed and discussed the audited financial statements as of and for the year ended June 30, 2023, with the Company’s
independent auditors, Marcum LLP, and discussed not only the acceptability but also the quality of the accounting principles, the reasonableness
of the significant judgments and estimates, critical accounting policies and the clarity of disclosures in the audited financial statements
prior to issuance. The Audit Committee discussed with Marcum LLP the matters required to be discussed by the applicable requirements
of the PCAOB and the SEC. The Audit Committee has received the written disclosures and the letter from Marcum LLP required by the applicable
requirements of the PCAOB regarding independent auditor communications with the Audit Committee concerning independence and has discussed
with Marcum LLP its independence.
Based
on the review and discussions with management and our independent registered public accounting firm, Marcum LLP, the Audit Committee
has recommended to the Board, and the Board has approved, that the audited financial statements be included in our Annual Report on Form
10-K for the year ended June 30, 2023, for filing with the SEC.
MEMBERS
OF THE AUDIT COMMITTEE:
Alan
Alden — Chair of the Committee
Jan
Jones Blackhurst
Chul
Woong Lim
PRINCIPAL
ACCOUNTING FEES AND SERVICES
Audit
Fees. The aggregate fees billed by our independent registered public accounting firms, for professional services rendered for the
audit of our annual financial statements for the years ended June 30, 2023 and 2022, including review of our interim financial statements
were $946,050 and $968,883, respectively. This includes $399,000 and $547,050 billed from Marcum LLP and Friedman LLP for the year ended
June 30, 2023. All amounts were billed from Friedman LLP for the year ended June 30, 2022.
Audit
Related Fees. We incurred fees to our independent registered public accounting firms of $351,800 and $245,000 for audit related fees
during the fiscal years ended June 30, 2023 and 2022, respectively, which related to filings with the SEC by the Company during the years
ended June 30, 2023 and 2022. This includes $331,800 and $20,000 billed from Marcum LLP and Friedman LLP for the year ended June 30,
2023. All amounts were billed from Friedman LLP for the year ended June 30, 2022.
Tax
Fees. We did not incur fees to our independent registered public accounting firms for tax during the fiscal years ended June 30,
2023 and 2022.
All
Other Fees. We did not incur fees to our independent registered public accounting firms for products and services provided by the
principal accountant, other than the services reported above, during the fiscal years ended June 30, 2023 and 2022.
The
Audit Committee pre-approves all auditing services and all permitted non-auditing services (including the fees and terms thereof) to
be performed by our independent registered public accounting firm.
MATTERS
TO BE VOTED ON
PROPOSAL
NO. 1: ELECTION OF DIRECTORS
Currently,
the Company has authorized a five-member Board of Directors. The Board has chosen, however, to nominate only four members for election
at this annual meeting while a search is conducted for a person to fill the board position to be vacated by Chul Woong Lim upon the date
of the Annual Meeting on [●], 2024. Thus, there will be one vacant seat on our Board following the Annual Meeting. The directors
will serve until the next annual meeting of stockholders or until their successors are duly elected and qualified. Of the Board members
whose term expires at the Annual Meeting, Jan Jones Blackhurst, Damian Mathews, Alan Alden, and Robert Soper are all standing for reelection.
The
person named as “Proxy” in the enclosed Proxy will vote the shares represented by all valid returned proxies in accordance
with the specifications of the stockholders returning such proxies. If no choice has been specified by a stockholder, the shares will
be voted “FOR” the nominees. If at the time of the Annual Meeting any of the nominees named below should be unable
or unwilling to serve, which event is not expected to occur, the discretionary authority provided in the Proxy will be exercised to vote
for such substitute nominee or nominees, if any, as shall be designated by the Board. If a quorum is present and voting, the nominees
for directors receiving the highest number of votes will be elected. Abstentions and broker non-votes will have no effect on the vote.
NOMINEES
FOR ELECTION AS DIRECTOR
The
persons nominated as directors are as follows:
Name |
|
Age |
|
Position(s) |
Jan
Jones Blackhurst |
|
74 |
|
Chair
of the Board of Directors |
Damian
Mathews |
|
52 |
|
Chief
Operating Officer and Director |
Alan
Alden |
|
62 |
|
Director |
Robert
Soper |
|
51 |
|
Director |
Vote
Required
The
four nominees for director receiving the highest number of votes “FOR” election will be elected as directors. This
is called a plurality. Abstentions or votes against a director nominee will not be deemed a vote with respect to the director nominee
indicated and will have no impact on the election of directors although it will be counted for the purposes of determining whether there
is a quorum. Broker non-votes will have no effect on the outcome of this proposal.
Recommendation
of our Board
Our
Board unanimously recommends that you vote “FOR” the election of each of the nominees for directors.
PROPOSAL
NO. 2: NON-BINDING ADVISORY VOTE TO APPROVE THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY
STATEMENT.
Pursuant
to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Section 14A of the Exchange Act, we are conducting a stockholder
advisory vote on the compensation paid to our named executive officers. This proposal, commonly known as “say-on-pay,” gives
our stockholders the opportunity to express their views on our named executive officers’ compensation. The vote is advisory, and,
therefore, it is not binding on our Board, our Compensation Committee, or the Company. Nevertheless, our Compensation Committee will
take into account the outcome of the vote when considering future executive compensation decisions. We intend to conduct this advisory
vote every year based on the results of a vote on the frequency of the “say-on-pay” proposal in the 2021 Annual Proxy Statement
until the Company holds another vote on such frequency.
Our
executive compensation program is designed to attract, motivate and retain our named executive officers who are critical to our success.
Our Board believes that our executive compensation program is well tailored to retain and motivate key executives while recognizing the
need to align our executive compensation program with the interests of our stockholders and our “pay-for-performance” philosophy.
Our CNCG Committee continually reviews the compensation programs for our named executive officers to ensure they achieve the desired
goals of aligning our executive compensation structure with our stockholders’ interests and current market practices.
We
encourage our stockholders to read the “Summary Compensation Table” and other related compensation tables and narrative disclosures
in the “Executive Compensation” section of this Proxy Statement, which describe the 2023 compensation of our named executive
officers.
We
are requesting your advisory vote on the following resolution:
RESOLVED,
that the compensation of our named executive officers as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K, including
the compensation tables and the narrative disclosures that accompany the compensation tables, is hereby approved.
Vote
Required
The
affirmative vote of the holders of shares of Common Stock representing a majority of the shares of Common Stock cast at the Annual Meeting
via the virtual meeting platform or by proxy is required for the approval, on a non-binding advisory basis, of the compensation of the
Company’s named executive officers as disclosed in this Proxy Statement. Abstentions and broker non-votes will have no effect on
the outcome of this proposal.
Recommendation
of our Board
Our
Board unanimously recommends that you vote “FOR” the approval, In a non-binding advisory VOTE, of the compensation
of the Company’s named executive officers as disclosed in THIS proxy statement.
PROPOSAL
NO. 3: RATIFY THE SELECTION OF MARCUM LLP AS THE COMPANY’S
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING JUNE 30, 2024.
The
Audit Committee of our Board has selected the firm of Marcum LLP as our independent registered public accounting firm for the fiscal
year ending June 30, 2024. Marcum LLP has served as our independent registered public accounting firm since the fiscal year ended June
30, 2021, and such date takes into account the acquisition of certain assets of Friedman LLP by Marcum LLP effective September 1, 2022.
Although stockholder ratification of the selection of Marcum LLP is not required by law or Nevada rules, our Audit Committee believes
that it is advisable and has decided to give our stockholders the opportunity to ratify this selection. If this proposal is not approved
at the Annual Meeting, our Audit Committee may reconsider this selection. Representatives of Marcum LLP are expected to attend the Annual
Meeting, will have the opportunity to make a statement if they desire and will be available to respond to appropriate questions.
Vote
Required
The
affirmative vote of the holders of shares of Common Stock representing a majority of the shares of Common Stock cast is required for
the ratification of the selection of Marcum LLP as our independent registered public accounting firm for the current fiscal year. Abstentions
will have no effect on the outcome of this proposal. There will be no broker non-votes with respect to this proposal.
Recommendation
of our Board
OUR
BOARD unanimously RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF
THE SELECTION OF MARCUM LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING JUNE 30,
2023.
PROPOSAL
NO. 4: POTENTIAL ISSUANCE OF AN EXCESS OF 19.99% OF OUR OUTSTANDING COMMON STOCK, PAR VALUE $0.001 PER SHARE, UNDER THE COMPANY’S
OUTSTANDING SERIES D PREFERRED STOCK, SERIES D PREFERRED WARRANTS AND COMMON STOCK WARRANTS ISSUED ON MAY 22, 2023.
Background
and Description of Series D Preferred Stock, Series D Preferred Warrants, and Common Stock Warrants
You
are being asked to consider and vote upon a proposal (the “Common Share Issuance Proposal”) that provides for the potential
issuance of a number of shares of our Common Stock in excess of 19.99% of our outstanding shares of Common Stock, under the Company’s
Series D Preferred Stock, Series D Preferred Warrants (as defined below) and Common Stock Warrants (as defined below) (collectively,
the “Securities”), assuming conversion or exercise of the Securities into shares of Common Stock in accordance with their
terms, by the holder.
The
Common Share Issuance Proposal, if passed, will allow us to issue shares of Common Stock that are potentially issuable under each of
the (1) approximately $4.2 million outstanding Series D Preferred Stock (as of December 31, 2023), (2) Series D Preferred
Stock that is issuable under the Series D Preferred Warrants (up to approximately $4.3 million if fully exercised as of December 31,
2023), and (3) Common Stock Warrants (currently exercisable for 3,584 shares of Common Stock). Each of the outstanding
Series D Preferred Stock, the Series D Preferred Warrants and Common Stock Warrants, in and of themselves, could, if the Common Share
Issuance Proposal is approved by our stockholders, result in the issuance of more than 19.99% of the shares of Common Stock outstanding
on the date of execution of the Series D SPA (as defined below). The Series D SPA obligates the Company to seek stockholder approval
of resolutions providing for the approval of the issuance of all of the shares of Common Stock in compliance with the rules and regulations
of the Nasdaq Stock Market (without regard to any limitations on conversion or exercise set forth in the Series D Preferred Stock Certificate
of Designations or the Common Stock Warrants, respectively). Issuances of shares of Common Stock upon conversion of the Series
D Preferred Stock, the Series D Preferred Stock issuable upon exercise of the Series D Preferred Warrants, and upon exercise of the Common
Stock Warrants, in excess of 19.99% of the Company’s outstanding shares of Common Stock, would require approval by
the Company’s stockholders pursuant to the rules and regulations of the Nasdaq Stock Market and the Series D Certificate of
Designations.
The
Company issued the Securities to an institutional investor and the holder of its outstanding Series C Convertible Preferred Stock (the
“Holder”), in connection with a Securities Purchase Agreement (the “Series D SPA”) dated April 30, 2023, which
subsequently closed on May 22, 2023. The Company designated 10,000 shares of preferred stock as Series D Preferred Stock. The Series
D SPA contemplated a direct offering to the Holder that included (i) 4,300 shares of new Series D Preferred Stock, $0.001 par value per
share, for a price of $1,000 per share, (ii) common warrants to purchase 3,584 shares of our Common Stock at a price of $784
per share (the “Common Stock Warrants”), and (iii) preferred warrants to purchase 4,300 shares of our Series D Preferred
Stock at a price of $1,000 per share (the “Series D Preferred Warrants).
The
terms and provisions of the Series D Preferred Stock were set forth in a Series D Convertible Preferred Stock Certificate of Designations
(the “Series D Certificate of Designations”), filed and effective with the Secretary of State of the State of Nevada in connection
with the closing on May 22, 2023.
Series
D Preferred Stock
Ranking
The
Series D Preferred Stock, with respect to the payment of dividends, distributions and payments upon the liquidation, dissolution and
winding up of the Company, ranks equal to the 10% Series A Cumulative Redeemable Convertible Preferred Stock and the Series C Convertible
Preferred Stock and is senior to all Common Stock of the Company unless the Investor consents to the creation of other capital
stock of the Company that is senior or equal in rank to the Series D Preferred Stock.
Adjustments
In
the event that the Company grants, issues or sells (or enters into any agreement to grant, issue or sell), or is deemed to have granted,
issued or sold, any shares of Common Stock, but excluding certain excluded issuances as described in the Series D Certificate
of Designations, for a consideration per share (the “New Issuance Price”) less than a price equal to the Conversion
Price in effect immediately prior to such granting, issuance or sale or deemed granting, issuance or sale (the foregoing a “Dilutive
Issuance”), then, immediately after such Dilutive Issuance, the Conversion Price then in effect shall be reduced to an amount equal
to the New Issuance Price, subject to certain exceptions described in the Series D Certificate of Designations.
If
the Company effects any stock split, stock dividend, recapitalization or otherwise or any combination, reverse stock split or otherwise
then in each such case the calculations with respect to the Conversion Price and similar terms shall be adjusted accordingly, all as
more fully described in the Series D Certificate of Designations. If there occurs any stock split, stock dividend, stock combination
recapitalization or other similar transaction involving the Common Stock (each, a “Stock Combination Event”, and such
date thereof, the “Stock Combination Event Date”) and the Event Market Price (as defined below) is less than the Conversion
Price then in effect (after giving effect to the automatic adjustment above), then on the sixteenth (16th) trading day immediately following
such Stock Combination Event Date, the Conversion Price then in effect on such sixteenth (16th) trading day (after giving effect to the
automatic adjustment above) shall be reduced to the Event Market Price. “Event Market Price” means, with respect to any Stock
Combination Event Date, 80% of the quotient determined by dividing (x) the sum of the VWAP (as defined in the Series D Certificate of
Designations) of the Common Stock for each of the three (3) lowest trading days during the twenty (20) consecutive trading
day period ending and including the trading day immediately preceding the sixteenth (16th) trading day after such Stock Combination Event
Date, divided by (y) three (3).
Purchase
Rights
If
at any time the Company grants, issues or sells any options, convertible securities, or rights to purchase stock, warrants, securities
or other property pro rata to all or substantially all of the record holders of any class of Common Stock (the “Purchase Rights”),
then each holder of Series D Preferred Stock will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which such holder of Series D Preferred Stock could have acquired if such holder of Series D Preferred Stock had held
the number of shares of Common Stock acquirable upon complete conversion of all the Series D Preferred Stock held by such holder
of Series D Preferred Stock immediately prior to the date as of which the record holders of shares of Common Stock are to be determined
for the grant, issue or sale of such Purchase Rights; subject to certain limitations on beneficial ownership.
Conversion
The
Series D Certificate of Designations contemplates that the Series D Preferred Stock will be convertible into Common Stock (the
“Conversion Shares”) at the option of the holder of Series D Preferred Stock at any time from time to time after the date
of issuance thereof. The number of Conversion Shares issuable upon conversion of any share of Series D Preferred Stock shall be determined
by dividing (x) the Conversion Amount (as defined below) of a share of Series D Preferred Stock by (y) the lower of (i) the Conversion
Price (as defined below); and (ii) the Alternate Conversion Price (as defined below), subject to the Floor Price (as defined below).
“Conversion Amount” shall mean, with respect to each share of Series D Preferred Stock, the sum of (A) $1,000 per share (such
amount, subject to adjustment, the “Stated Value”) and (B) all declared and unpaid dividends with respect to such Stated
Value and all declared and unpaid dividends as of such date of determination and any other amounts owed under the Series D Certificate
of Designations. “Conversion Price” means, with respect to each Series D Preferred Stock, as of any conversion date or other
date of determination, a price that is $3.00, subject to adjustment as provided in the Series D Certificate of Designations. “Alternate
Conversion Price” shall mean with respect to any Alternate Conversion (as defined in the Series D Certificate of Designations)
that price which shall be the lowest of (i) the applicable Conversion Price as in effect on the applicable conversion date
of the applicable Alternate Conversion, and (ii) the greater of (x) the Floor Price and (y) 90% of the lowest VWAP of the Common Stock
during the ten (10) consecutive trading day period ending and including the trading day of the applicable Conversion Notice
(such period, the “Alternate Conversion Measuring Period”). All such determinations to be appropriately adjusted for any
stock dividend, stock split, stock combination, reclassification or similar transaction that proportionately decreases or increases the
Common Stock during such Alternate Conversion Measuring Period. “Floor Price” shall mean $0.39.
Liquidation
In
the event of a liquidation, the holders of Series D Preferred Stock shall be entitled to receive in cash out of the assets of the Company,
whether from capital or from earnings available for distribution to its stockholders (the “Liquidation Funds”), before
any amount shall be paid to the holders of any of shares of Common Stock or other junior stock, but pari passu with any parity
stock then outstanding, such as the Series A Preferred Stock, an amount per preferred share equal to the greater of (A) 125% of the Conversion
Amount of such preferred share on the date of such payment and (B) the amount per share such Holder would receive if such Holder converted
such preferred share into Common Stock (at the Alternate Conversion Price then in effect) immediately prior to the date of such
payment, provided that if the Liquidation Funds are insufficient to pay the full amount due to the Holders and holders of shares of parity
stock, then each Holder and each holder of parity stock shall receive a percentage of the Liquidation Funds equal to the full amount
of Liquidation Funds payable to such Holder and such holder of parity stock as a liquidation preference, in accordance with their respective
Certificate of Designations (or equivalent), as a percentage of the full amount of Liquidation Funds payable to all holders of preferred
shares and all holders of shares of parity stock.
In
addition, the Company will provide the holders of Series D Preferred Stock with notice of certain triggering events as defined in the
Series D Certificate of Designations (each a “Triggering Event”) or if a holder of Series D Preferred Stock may become aware
of a Triggering Event as a result of which the holder of Series D Preferred Stock may choose to convert the Series D Preferred Stock
they hold into Conversion Shares at the Series D Alternate Conversion Price for the Triggering Event Conversion Right Period (as defined
in the Series D Certificate of Designations).
Mandatory
Redemption on Bankruptcy Triggering Event
Upon
any Bankruptcy Triggering Event, the Company shall immediately redeem, in cash, each share of Series D Preferred Stock then outstanding
at a redemption price equal to the greater of (i) the product of (A) the Conversion Amount to be redeemed multiplied by (B) 115% and
(ii) the product of (X) the Conversion Rate (calculated using the lowest Alternate Conversion Price during the period commencing on the
20th trading day immediately preceding such public announcement and ending on the date the Company makes the entire redemption payment
with respect to the Conversion Amount in effect immediately following the date of initial public announcement (or public filing of bankruptcy
documents, as applicable) of such Bankruptcy Triggering Event multiplied by (Y) the product of (1) 115% multiplied by (2) the greatest
closing sale price of the Common Stock on any trading day during the period commencing on the date immediately preceding such
Bankruptcy Triggering Event and ending on the date the Company makes the entire redemption payment required to be made.
Dividends
Dividends
on the Series D Preferred Stock will accrue daily at a rate equal to 8.0% per annum, increasing 0.50% each 135 day anniversary from the
date of issuance and be payable by way of inclusion of the dividends in the Conversion Amount on each conversion date in
accordance with an optional conversion or upon any redemption hereunder (including, without limitation, upon any required payment upon
any Bankruptcy Triggering Event).
Beneficial
Ownership Limitation
The
Series D Preferred Stock cannot be converted into Common Stock if the holder of Series D Preferred Stock and its affiliates would
beneficially own more than 9.99% of the outstanding Common Stock. However, any holder of Series D Preferred Stock may increase
or decrease such percentage to any other percentage not in excess of 9.99% upon notice to us, provided that any increase in this limitation
will not be effective until 61 days after delivery of such notice from the holder to us and such increase or decrease will apply only
to the holder providing notice.
Voting
Rights
The
holders of the Series D Preferred Stock shall have no voting power and no right to vote on any matter at any time, either as a separate
series or class or together with any other series or class of share of capital stock, and shall not be entitled to call a meeting of
such holders of Series D Preferred Stock for any purpose nor shall they be entitled to participate in any meeting of the holders of Common
Stock except as provided in the Series D Certificate of Designations or as otherwise required by applicable law. To the extent that
under applicable law, the vote of the holder of the Series D Preferred Stock, voting separately as a class or series, as applicable,
is required to authorize a given action of the Company, the affirmative vote or consent of the Investor of the shares of the Series D
Preferred Stock, voting together in the aggregate and not in separate series unless required under applicable law, represented at a duly
held meeting at which a quorum is presented or by written consent of the Investor (except as otherwise may be required under the applicable
law), voting together in the aggregate and not in separate series unless required under the applicable law, shall constitute the approval
of such action by both the class or the series, as applicable. Holders of the Series D Preferred Stock shall be entitled to written notice
of all stockholder meetings or written consents (and copies of proxy materials and other information sent to stockholders)
with respect to which they would be entitled to vote, which notice would be provided pursuant to the Bylaws and the applicable law.
Without
first obtaining the affirmative vote of the Holder, voting together as a single class, the Company shall not: (a) amend or repeal any
provision of, or add any provision to, its Certificate of Incorporation or Bylaws, or file any Certificate of Designations or articles
of amendment of any series of shares of preferred stock, if such action would adversely alter or change in any respect the preferences,
rights, privileges or powers, or restrictions provided for the benefit of the Series D Preferred Stock hereunder, regardless of whether
any such action shall be by means of amendment to the Certificate of Incorporation or by merger, consolidation or otherwise; (b) increase
or decrease (other than by conversion) the authorized number of Series D Preferred Stock; (c) create or authorize (by reclassification
or otherwise) any new class or series of Senior Preferred Stock or Parity Stock (other than the Series C Convertible Preferred Stock);
(d) purchase, repurchase or redeem any shares of Junior Stock (other than pursuant to the terms of the Company’s equity incentive
plans and options and other equity awards granted under such plans (that have in good faith been approved by the Board)); (e) pay dividends
or make any other distribution on any shares of any Junior Stock; (f) issue any preferred stock other than as contemplated thereby or
pursuant to the Series D SPA; or (g) whether or not prohibited by the terms of the Series D Preferred Stock, circumvent a right
of the Series D Preferred Stock under the Series D Certificate of Designations.
Other
Terms
The
terms of the Series D Preferred Stock prohibit the Company from subsequent financings at a price below the Conversion Price, unless approved
by the holder of Series D Preferred Stock.
The
Holder has the option to require the Company to use 50% of the proceeds from any subsequent financing to redeem the Series D Preferred
Stock at the greater of (a) the Conversion Amount of such Subsequent Placement Optional Redemption Share being redeemed as of the Subsequent
Placement Optional Redemption Date and (b) solely if any Equity Conditions Failure (as defined in the Series D Certificate of Designations)
then exists, the product of (1) the Conversion Rate of an Alternate Conversion of such share being redeemed multiplied by (2) the greatest
closing sale price of the Common Stock on any trading day during the period commencing on the date immediately preceding such
the date of notice of the redemption and ending on the trading day immediately prior to the date the Company makes the entire payment
required to be made.
The
holder of Series D Preferred Stock may convert the Series D Preferred Stock into any subsequent financing thereby receiving securities
issued in such subsequent financing in exchange for cancellation of all or part of the Series D Preferred Stock.
The
Conversion price has been subsequently lowered pursuant to the terms of the August 2023 Settlement Agreement, dated August 15, 2023 (the
“August 2023 Settlement Agreement”) and the October 2023 Settlement Agreement, dated October 6, 2023 (the
“October 2023 Settlement Agreement”) and the full ratchet anti-dilution adjustment contained in the Series D Certificate of Designations.
Common
Stock Warrants and Series D Preferred Stock Warrants
The
Common Stock Warrants and the Series D Preferred Stock Warrants expire in five years. The Common Stock Warrants have a
cashless exercise provision. The exercise of the Common Stock Warrants are subject to a beneficial ownership limitation for the Holder
of 4.99%, which may be increased to 9.99% provided that the increase will not be effective until the 61st day after delivery of a notice
to the Company.
If
and when the Series D Preferred Stock Warrants are exercised, pursuant to the terms of the Common Stock Warrants, the number of
shares of Common Stock that will be issuable under the Common Stock Warrants will increase by an amount equal to the aggregate
value of the shares of Series D Preferred Stock (including any dividends or other amounts thereon), divided by the Alternate Conversion
Price (as defined in the Series D Certificate of Designations). The Series D Preferred Warrants and the Common Stock Warrants
contain customary anti-dilution protection for the Holder and the Common Stock Warrants contain full ratchet anti-dilution protection
in the event of certain dilutive issuances. In addition, the Common Stock Warrants provide the Holder with certain purchase rights in
subsequent issuances or sales of securities by the Company.
Registration
Right Agreement
Pursuant
to a Registration Rights Agreement (the “Series D RRA”) between the Holder and the Company, the Company intends to grant
certain registration rights to the Investor. The Series D RRA requires the Company to file a registration statement covering the
resale of the shares of Common Stock underlying the shares of Series D Preferred Stock to be issued in the offering and the shares of
Common Stock issued upon exercise of the Common Stock Warrants. The Series D RRA also covers the conversion of any shares of Series
D Preferred Stock issued upon exercise of the Series D Preferred Warrants. The Company was required to file the registration statement
within 60 days from the closing of the transactions contemplated by the Series D SPA and cause the registration statement to be declared
effective within 120 days after the closing of the transactions contemplated by the Series D SPA. The Series D RRA contains mutual customary
indemnification provisions among the parties and requires the Company to make certain cash payments (“RRA Fees”) in connection
with any delay in the filing of a registration statement for the purpose of registering the resale of the Common Stock
issuable under the Securities, despite the Company’s best efforts. As of December 31, 2023, the Company was obligated to
pay to the Holder RRA Fees of approximately $98,000 (subject to increase with respect to any additional RRA Fees that may accrue,
from time to time, under the Series D RRA, and subject to decrease in accordance with the August 2023 Settlement Agreement and
the October 2023 Settlement Agreement, each entered into with the Holder).
Why
We Need Stockholder Approval
Because
our Common Stock is traded on The Nasdaq Capital Market, we are subject to the Nasdaq Listing Rules, including Nasdaq Listing Rule 5635(d)(2).
Pursuant to Nasdaq Listing Rule 5635(d)(2), stockholder approval is required prior to the issuance of securities in connection with a
transaction (or a series of related transactions) other than a public offering involving the sale, issuance or potential issuance of
Common Stock (or securities convertible into or exercisable for Common Stock) equal to 20% or more of the Common Stock or 20% or more
of the voting power outstanding before the issuance at a conversion price lower than the “Minimum Price.” “Minimum
Price” is defined under Nasdaq Listing Rule 5635(d)(1)(A) as a price that is the lower of: (i) the Nasdaq Official Closing Price
(as reflected on Nasdaq.com) immediately preceding the signing of the binding agreement; or (ii) the average Nasdaq Official Closing
Price of the common stock (as reflected on Nasdaq.com) for the five trading days immediately preceding the signing of the binding agreement.
Under the terms of the October 2023 Settlement Agreement and the Series D Certificate of Designations, the Series D Preferred
Stock may be convertible at a price lower than 90% of the lowest VWAP (as defined in the Series D Certificate
of Designations) of the 10 trading days ending and including the date of conversion, in accordance with Section 31(g) of the Series D Certificate of Designations and the October 2023 Settlement Agreement. Consequently, shares of Common Stock
are issuable upon conversion of the Series D Preferred Stock at prices below the Minimum Price.
In
addition, because the Common Stock Warrants contain full ratchet anti-dilution protection for the Holder, the exercise price per share
of Common Stock is required to be adjusted to the issuance price of the Company’s securities in the event of a dilutive issuance,
at a price lower than the then applicable exercise price. Consequently, shares of Common Stock are issuable upon exercise of the Common
Stock Warrants at prices below the Minimum Price.
The
stockholder approval requirement for issuances of the shares of Common Stock potentially issuable under the Series D Preferred
Stock, Common Stock Warrants and Series D Preferred Warrants was incorporated into the Series D SPA in order to comply with Nasdaq
Listing Rule 5635(d)(2).
Our
Board has determined to recommend that our stockholders approve the Common Share Issuance Proposal because the terms of the Series D
SPA require us to seek stockholder approval for the Common Share Issuance Proposal. Moreover, if the Common Share Issuance Proposal
does not pass, the Series D Preferred Stock will continue to remain without an ability to meaningfully convert into shares of Common
Stock and reduce its value. Instead, the value of the Series D Preferred Stock will increase while it continues to accrue
dividends, among other fees and penalties that the Company may incur while it remains outstanding.
Potential
Effects of Approval of this Proposal
If
the Common Share Issuance Proposal is approved, the issuance of shares of our Common Stock upon conversion of the outstanding Series
D Preferred Stock and upon conversion of any shares of Series D Preferred Stock issued under the Series D Preferred Warrants, will reduce
the value of the Series D Preferred Stock, as amounts converted will avoid the accrual of dividends, other fees and penalties that the
Company may incur if it were to remain outstanding. The Common Share Issuance Proposal, if approved by our stockholders, and used
by the Holder to issue shares in excess of the 19.99% threshold, will significantly dilute, and thereby reduce, each existing stockholder’s
proportionate ownership in our Common Stock. Such issuances will also negatively impact the price of our Common Stock when shares are
issued below the market price of our Common Stock. Excess issuances beyond the 19.99% threshold will also significantly dilute the voting
power of a person seeking control of the Company, thereby deterring, or rendering more difficult a merger, tender offer, proxy contest
or an extraordinary corporate transaction opposed by the Company. The stockholders do not have preemptive rights to subscribe to additional
shares that may be issued by the Company in order to maintain their proportionate ownership of the Common Stock.
Potential
Effects of Non-Approval of this Proposal
The
Company is not seeking the approval of its stockholders to authorize its entry into the Securities, as the Company has already done so
and the transaction documents relating to the Securities are already binding obligations of the Company. The failure of the Company’s
stockholders to approve the Common Share Issuance Proposal will not negate the existing terms of the Securities, however, the Securities
would not be convertible over the 19.99% threshold. All obligations to facilitate the issuances of the shares of Common Stock issuable
under the Securities would remain in effect and there will be adverse direct and indirect impacts on the Company’s financial condition
and operations. If the Holder is not able to convert its Securities into shares of Common Stock in excess of the 19.99% threshold when
the Company otherwise would have been obligated to do so under the terms of the Securities, dividends will continue to accrue on the
outstanding balance of Series D Preferred Stock, thereby increasing the Company’s obligations to the Holder. As the outstanding
obligations due to the Holder increase, the Company will be obligated to settle additional amounts owed to the Holder in securities of
the Company, which would result in further future dilution to holders of Common Stock. Also, it may become increasingly difficult for
the Company to raise capital in public or private offerings, to effect attractive acquisitions or other transactions of strategic importance.
Additionally, it may be necessary for the Company to acquire additional financing in order to repay the obligations under the Securities,
which may result in additional transaction expenses, more dilution to holders of Common Stock or the granting of additional preferential
rights to future investors.
In addition in the event the Company does
not obtain stockholder approval of the Common Share Issuance Proposal, the Company would then be required to call a stockholder meeting
at the end of each quarter subsequent to this Annual Meeting until the date the stockholder approval is obtained, which would require
additional Company resources, including use of available working capital associated with holding one or more stockholder meetings to
seek such stockholder approval.
Vote
Required
The
affirmative vote of the holders of shares of Common Stock representing a majority of the shares of Common Stock cast at the Annual Meeting
via the virtual meeting platform or by proxy is required for the approval of the Common Share Issuance Proposal. Abstentions and broker
non-votes will have no effect on the outcome of this Proposal.
Recommendation
of our Board
Pursuant
to the Series D SPA, the Company is obligated to present the Common Share Issuance Proposal to the stockholders through a special or
annual meeting along with the Board’s recommendation to vote “For” the proposal until such proposal is approved.
Our
Board unanimously recommends that you vote “FOR” the approval of the CoMMON SHARE ISsuance PROPOSAL.
PROPOSAL
NO. 5 APPROVAL OF AN AMENDMENT TO THE COMPANY’S ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK FROM
1.25 MILLION TO 500 MILLION SHARES.
Background
On
December 21, 2023, the Company implemented a one-for-four-hundred (1-for-400) reverse stock split (the “Reverse Split”) as
part of the Company’s ongoing plan of compliance with the Nasdaq Listing Rules, and more specifically, to regain compliance with
Nasdaq Listing Rule 5810(c)(3)(A), as the minimum bid price of our common stock had been below $0.10 per share for 10 consecutive business
days. The Company implemented the Reverse Split following approval through resolution adopted by the Board of Directors under the Nevada
Revised Statute NRS 78.207 without stockholder approval, which proportionally reduced the number of authorized shares in the same
one-for-four-hundred ratio from 500 million to 1.25 million shares. The Company seeks stockholder approval of an amendment to
the Company’s articles of incorporation to increase the authorized shares of Common Stock from 1.25 million to 500 million (the
“Authorized Share Increase Proposal”).
Reasons
for the Authorized Share Increase
Following
the Reverse Split, the Company does not have sufficient authorized shares to raise capital in a public offering of common
stock, or to accommodate conversions of its Series A Preferred Stock, Series C Convertible Preferred Stock and Series D Preferred
Stock, to common stock. The Series A Preferred Stock has a liquidation value of $11.00 and is convertible into common stock
and the Series C Convertible Preferred Stock and the Series D Preferred Stock require a reserve of a minimum of 100% of the
aggregate number of shares of Common Stock as shall from time to time be necessary to effect the conversions.
The
Company’s primary reasons for approving and recommending the Authorized Share Increase proposal are to (i) allow the Company to
issue more shares of common stock to increase its stockholders’ equity to maintain long term compliance with Nasdaq Listing Rule
5550(b), the minimum stockholders’ equity requirement of $2.5 million, (ii) allow the Company to raise additional capital to support
operations and grow the business; (iii) ensure sufficient shares to allow for the conversion of the Company’s outstanding classes
of convertible preferred stock, warrants and other convertible instruments, (iv) ensure sufficient shares are available to award our
management team and board of directors to incentivize retention and performance, and (v) allow for available shares to effect
potential merger and acquisition activities.
The
Authorized Share Increase, if approved by our stockholders, would become effective upon the filing of the amendment to our Articles of
Incorporation with the Secretary of State of the State of Nevada, or at the later time set forth in the amendment.
The
Board of Directors believes the Authorized Share Increase is necessary and advisable for the reasons stated above. If the Authorized
Share Increase Proposal is passed, we intend to raise capital through public or private offerings of common stock, warrants or other
convertible securities and may effect additional equity conversions under the terms of the Series C Convertible Preferred Stock and Series
D Certificate of Designations and the October 2023 Settlement Agreement.
Potential
Effects of the Proposal
If
our stockholders approve the Authorized Share Increase and the Board of Directors effects it, the number of shares of common stock issuable
will be increased from 1.25 million to 500 million shares. The Authorized Share Increase itself will have no direct or immediate effect
on the holders of our Common Stock at the time of the increase and uniformly and will not affect any stockholder’s percentage ownership
interest in the Company nor will it affect any stockholder’s proportionate voting power.
The
additional authorized shares of common stock will have the same rights as the presently authorized shares of common stock, including
the right to cast one vote per share of common stock. Although the authorization of additional shares will not, in itself, have any effect
on the rights of any holder of our common stock, the future issuance of additional shares of common stock (other than by way of a stock
split or dividend) will have the effect of diluting the voting rights and could have the effect of diluting earnings per share and book
value per share of existing stockholders. The Board of Directors expects to issue some or all of the additional shares of common stock
authorized by amendment of the Company’s Articles of Incorporation or held in reserve for investors for potential future issuance,
as needed, for existing obligations as disclosed in the Company’s annual and quarterly reports, and our registration statements
on Form S-3 and Form S-1. It is also possible that some of these additional shares could be used in the future for various other purposes
without further stockholder approval, except as such approval may be required in particular cases by our charter documents, applicable
law or the rules of any stock exchange or other quotation system on which our securities may then be listed. Additional shares of common
stock so authorized will be available for issuance by the Company for raising additional capital, conversions of preferred stock and
debt into equity, to allow exercise of outstanding warrants and stock options, as incentives to employees, officers or directors, and
as inducements for possible acquisitions, establishing strategic partnerships with other companies, or other corporate purposes. The
Company does not anticipate that it would seek authorization from the stockholders for issuance of any additional authorized shares unless
required by applicable law or regulations. The increase in authorized common stock will not have any immediate effect on the rights of
existing stockholders, but it would have a dilutive effect on our existing stockholders when the additional shares are issued.
We
could also use the additional shares of common stock to oppose a hostile takeover attempt or to delay or prevent changes in control or
management of the Company. Although the Board’s approval of the Authorized Share Increase proposal was not prompted by the threat
of any hostile takeover attempt (nor is the Board currently aware of any such attempts directed at the Company), nevertheless, stockholders
should be aware that the Authorized Share Increase could facilitate future efforts by us to deter or prevent changes in control of the
Company, including transactions in which stockholders of the Company might otherwise receive a premium for their shares over then current
market prices. This increase in the authorized number of shares of common stock and the subsequent issuance of such shares could have
the effect of delaying or preventing a hostile change in control of the Company without further action by the Company’s stockholders.
Shares of authorized and unissued common stock could (within the limits imposed by applicable law and stock exchange regulations) be
issued in one or more transactions which would make a hostile change in control of the Company more difficult, and therefore less likely.
Management’s use of additional shares to resist or frustrate a hostile third-party transaction favored by a majority of the independent
stockholders would likely result in an above-market premium being paid in that transaction. Any such issuance of the additional shares
of common stock would likely have the effect of diluting the earnings per share and book value per share of outstanding shares of Company
common stock, and such additional shares could be used to dilute the stock ownership or voting rights of a person seeking to obtain control
of the Company.
The
Company’s increase in authorized common stock will become effective upon the filing of an amendment to the Company’s articles
of incorporation with the Nevada Secretary of State, which we would intend to complete promptly if we receive stockholder approval of
the Authorized Share Increase proposal. Information with respect to the filing of the amendment to the Company’s articles of incorporation
and the increase in authorized common stock would be included in a Current Report on Form 8-K filed with the Securities and Exchange
Commission.
Vote
Required
The
affirmative vote of the holders of shares of Common Stock representing a majority of the voting power of all issued and outstanding Common
Stock is required for the approval of the amendment to the Company’s Articles of Incorporation to increase the authorized shares
of Common Stock from 1.25 million to 500 million shares. Abstentions and broker non-votes will have the same effect as a vote “AGAINST”
the proposal as they will not be counted toward reaching a majority of the issued and outstanding shares. The Series E Preferred Stock
votes proportionately to the Common Stock.
Even
if the Authorized Share Increase proposal were to receive the affirmative vote of more than a majority of the shares of Common Stock
present at the Annual Meeting or by proxy, there may not be sufficient votes to approve the Authorized Share Increase proposal because
of the higher voting standard of approval by the affirmative vote of the holders of shares of Common Stock representing a majority of
the voting power of all issued and outstanding Common Stock. As a result, abstentions and broker non-votes will have the same effect
as a vote “AGAINST” the proposal as they will not be counted toward reaching a majority of the issued and outstanding
shares. In order to attempt to procure the vote necessary to affect the Authorized Share Increase proposal, on January 5, 2024,
we issued 100 shares of our Series E Preferred Stock to a member of the Company’s management. The terms of the Series E
Preferred Stock are set forth in a Certificate of Designation of Series E Preferred Stock (the “Certificate of Designation”),
filed with the Secretary of State of the State of Nevada, and effective on January 5, 2024. The Series E Preferred Stock does
not have any voting rights except with respect to the Authorized Share Increase proposal presented at the Annual Meeting, or otherwise
as required by law. With respect to the Authorized Share Increase proposal, the outstanding shares of Series E Preferred Stock is entitled
to 600,000,000 votes on such proposal in the aggregate, which is referred to as supermajority voting; however the votes by the holder
of Series E Preferred Stock will be counted in the same “mirrored” proportion as the aggregate votes cast by the holders
of Common Stock who vote on the Authorized Share Increase proposal. For example, if 50.5% of the shares of Common Stock cast at the Annual
Meeting or by proxy are voted “FOR” Proposal No. 5, then the Company will count 50.5% of the votes cast (or votes)
by the holder of the Series E Preferred Stock as votes “FOR” Proposal No. 5. Holders of Common Stock and Series E
Preferred Stock will vote on the Authorized Share Increase proposal as a single class.
The
Board of Directors determined that it was in the best interests of the Company to provide for supermajority voting of the Series E Preferred
Stock in order to obtain sufficient votes on the Authorized Share Increase proposal. Due to the required proportional voting structure
of the Series E Preferred Stock that mirrors the actual voting by holders of the Common Stock, the supermajority voting will serve to
reflect the voting preference of the holders of Common Stock that actually vote on the matter, whether for or against the proposal, and
therefore will not override the stated preference of the holders of Common Stock.
If
the Authorized Share Increase proposal is approved, the outstanding shares of Series E Preferred Stock will be automatically redeemed
upon the stockholders’ approval of the Authorized Share Increase proposal and will have no further rights, voting or otherwise.
Recommendation
of our Board
Our
Board UNANIMOUSLY recommends that you vote “FOR” the approval of the AUTHORIZED SHARE INCREASE Proposal BECAUSE IT
IS IN THE BEST INTEREST OF THE coMPANY AND OUR STOCKHOLDERS.
STOCKHOLDER
NOMINATIONS OF DIRECTORS AND OTHER BUSINESS
Under
our bylaws, as amended, notice of any director nomination or stockholder proposal intended to be presented by a stockholder at the 2024
annual meeting of stockholders must be delivered to our Secretary at our principal executive offices not earlier than the close of business
on [●], 2024, nor later than the close of business on [●], 2024; provided that in the event that the date of
the 2024 annual meeting is more than thirty (30) days before or more than seventy (70) days after [●], 2025, notice must
be delivered not earlier than the close of business on the one hundred twentieth (120th) day prior to such annual meeting
and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the tenth
(10th) day following the day on which public announcement of the date of such meeting is first made by us. In no event shall
the public announcement of an adjournment or postponement of an annual meeting commence a new time period for the giving of a stockholder’s
notice as described above.
The
deadline for any stockholder proposal for inclusion in our proxy materials for the 2024 annual meeting pursuant to Rule 14a-8
under the Exchange Act is [●], 2024; provided that a proposal will not be considered properly brought before the Annual
Meeting if notice thereof is provided after any applicable deadline in our bylaws, as amended, regardless of whether the stockholder
is seeking to include the proposal in our proxy materials. Any notice regarding any stockholder nomination must include the information
specified in Article III, Section 1 of our bylaws, as amended. In addition, we will be required under Rule 14a-19 under the Exchange
Act to include on our proxy card all nominees for director for whom we have received notice under the rule, which must be received no
later than 60 calendar days prior to the anniversary of the previous year’s annual meeting. For any such director nominee to be
included on our proxy card for next year’s annual meeting, we must receive notice under SEC Rule 14a-19 no later than [●], 2024. Please note that the notice requirement under SEC Rule 14a-19 is in addition to the applicable notice requirements under
the advance notice provisions of our bylaws, as amended, as described above.
OTHER
MATTERS
We
have not received notice of and do not expect any other matters to be presented for vote at the Annual Meeting, other than the proposals
described in this Proxy Statement. However, if any other matters are properly presented to the Annual Meeting, it is the intention of
the persons named in the accompanying proxy to vote, or otherwise act, in accordance with their judgment on such matters. If you grant
a proxy, the persons named as proxy holder, Jan Jones Blackhurst, Alex Igelman, or Lydia Roy, will have the discretion to vote your shares
on any additional matters properly presented for a vote at the Annual Meeting. If for any unforeseen reason, any of our nominees are
not available as a candidate for director, the proxy holder will vote your proxy for such other candidate or candidates nominated by
our Board.
HOUSEHOLDING
OF ANNUAL MEETING MATERIALS
The
SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for the proxy statements
and annual reports or Notices of Internet Availability, as applicable, with respect to two or more stockholders sharing the same address
by delivering a single proxy statement and annual report or the Notice of Internet Availability, as applicable, addressed to those stockholders.
This process, which is commonly referred to as “householding,” potentially provides extra convenience for stockholders and
cost savings for companies. We and some brokers household proxy materials, delivering a single proxy statement and annual report or the
Notice of Internet Availability, as applicable, to multiple stockholders sharing an address unless contrary instructions have been received
from one or more of the affected stockholders. Once you have received notice from your broker or us that they or we will be householding
materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time,
you no longer wish to participate in householding and would prefer to receive a separate proxy statement and annual report, or the Notice
of Internet Availability, as applicable, or if you are receiving multiples copies of the proxy statement and annual report or the Notice
of Internet Availability, as applicable, and wish to receive only one, please notify your broker or Broadridge Financial Solutions, Inc.
at 866-540-7095 or in writing at Broadridge, Householding Department, 51 Mercedes Way, Edgewood, NY 11717 if your shares are held in
a brokerage account or us if you hold registered shares. You can notify us by sending a written request addressed to Attn: Secretary,
Esports Entertainment Group, Inc., Block 6, Triq Paceville, St. Julians, Malta, STJ 3109 or by calling us at +356 2713 1276. We will
deliver promptly, upon written or oral request, a separate copy of the Proxy Statement and annual report or the Notice of Internet Availability,
as applicable, to a registered stockholder at a shared address to which a single copy of the applicable document(s) was delivered.
In
addition, we are subject to the information and reporting requirements of the Securities Exchange Act of 1934, as amended, and in accordance
therewith, we file periodic reports, documents and other information with the SEC relating to our business, financial statements and
other matters. Such reports and other information may be accessed at www.sec.gov. You are encouraged to review our Annual Report
on Form 10-K, together with any subsequent information we filed or will file with the SEC and other publicly available information.
*************
[●],
2024 |
By
Order of the Board of Directors, |
|
|
|
/s/
Jan Jones Blackhurst |
|
Jan
Jones Blackhurst |
|
Chair
of the Board of Directors |
|
|
|
/s/
Alex Igelman |
|
Alex
Igelman |
|
Chief
Executive Officer |
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