Good morning, everybody. I'm pleased to welcome you all to the 2023 annual meeting of shareholders of Elys Game Technology. It's being held here today at the company's corporate head office in Toronto, Canada. I'm Mike Ciavarella, Executive Chairman and Chief Executive Officer of Elys Game Technology. I will act as the chairperson of the meeting, and it's approximately 10 A.M. now, Eastern Time, November 9, 2023. And the 2023 annual shareholders stockholders meeting will now come to order. Before I get into the body of the discussion this morning, I'd like to remind folks that today I'm going to go through a number of formalities for the corporate meeting and the business of the meeting.
Then I'll field a few questions at the end, some of which I've received already. If anybody wishes to ask any questions, we'll try to get to as many as we can. I'd like you to write-
Announcing participants.
our investor relations contact
Nino Reppenning.
At investor.relations@elysgame.com. Please, if you would mind, writing in on, on that email, and we'll try to tackle a few of them. But I'm going-
Announcing participants. ...
BDO from BDO.
We'll call the meeting at no later than 11:00 A.M., okay? Eastern Time. So to go on, first, I would like to introduce you to other members of the board and our management team who are participating today. So we've got Carlo Reali, our Chief Financial Officer, based in Rome, Italy, Mark Korb, who is our Head of Corporate Affairs, Paul Sallwasser and Steven Shallcross, each of whom are current members of the board of directors. Unfortunately, I don't see a member of BDO AG. They weren't, they didn't confirm if they'd have anybody in attendance today, but I'm sure that they wish to thank the shareholders for their vote of confidence.
Present today is also Julian Doyle of Beard Winter, the company's general counsel, who will also act as secretary of the meeting and will take minutes. Thanks, Julian. So our, our Head of Corporate Affairs, Mark Korb, has been appointed to act as inspector of the elections at this meeting. Mark Korb has taken and subscribed to a customary oath of office to execute his duties with strict, strict impartiality. We will file this oath with the records of the meeting. Mark, please, will you report at this time with respect to the mailing of notice of the meeting and the stockholders list, and the number of shares present at the meeting? Are we here, Mark? Mark, can you hear us? Come on. I guess, Come on. One pause, everybody. We're having, we can't seem to reach Mark.
One moment, everybody. Oh, he's on, he's on the, on, yeah. Yeah.
Okay, Mike, can you hear me now?
Yeah, I can hear you better.
All right. Okay, so I'm gonna have to just disconnect Zoom to stop the feedback.
Okay.
That's better.
All right. So, okay, good. So, good morning, everybody. I apologize, apologies for the technology mishap. I present the confirmation of Broadridge and the affidavit of Signature Stock Transfer as transfer agent and registrar for the company's common stock, certifying as-
Announcing participants.
The due mailing of the notice of the meeting, the proxy statement, the form of proxy, and the annual report on Form 10-K to all stockholders of record at the close of business on September 13, 2023. The affidavit and forms of notice and other documents shall be filed with the minutes of this meeting. I present at this meeting a certified list of the holders of the company's common stock as of the close of business on September 13, 2023, the record date for this meeting, prepared and certified by Signature Stock Transfer, Inc. as transfer agent and registrar for the company's common stock. The list of stockholders shall be filed with the records of the company, and the list will be available for inspection at the close of this meeting.
Great. Thank you, Mark. And if they haven't already done so, will those present at the meeting who are stockholders please report their presence to myself or Mark Korb, and deliver any proxies or substituted proxies that you might have. If anybody's on the call today that haven't voted their shares and they have a voting number, please do indicate that that's the case. So I haven't heard anything. Mark, I haven't, I don't have any additional proxies other than what's been voted.
All right. So, Mr. Chairman, Chairperson, I have completed the number of shares represented in person or by proxy at this meeting, and they are present in person or by proxy at this meeting, the holders of at least 20,102,581 shares, representing approximately 52% of the 38,812,842 shares of the company's common stock, outstanding on the record date, September 13, 2023, and 152.3% of the quorum required to hold the meeting.
Thanks, Mark. So since we now have quorum, that represents more than 34% of the shares outstanding as of the record date, I would like to carry the remainder of the meeting through formalities. There'll be a short question and answer session at the conclusion of the meeting. I will not do a visual presentation for today. However, I want to inform stockholders that the intention here in the next 5-7 days is to file our quarter report for the quarter ending September 30, 2023, at which time we will file an earnings release and continue to provide updates to shareholders going forward. In terms of today, there are six items to be considered and acted upon at this meeting.
The first is to elect five nominees for director named here to, to the board of directors, and to hold office until the next annual meeting of stockholders, or until their successors are duly elected and qualified. Second one is the ratification of the appointment of BDO AG as our independent public accountant for the fiscal year ended December 31, 2023. The third item is the approval of the amendment of the company's 2018 Equity Incentive Plan, and the reservation for 12 million additional shares of common stock for issuance. Excuse me.
And item 4, to authorize the board, in its discretion, to implement one or more reverse stock splits of the company's outstanding common stock on a ratio of not less than 1-for-10, and not more than 1-for-10,000 in the aggregate, at any time prior to our next annual meeting of stockholders. Such amendment will be effected after stockholder approval, only in the event that the board of directors still deems it to be advisable. Fifth item is to approve the issuance of common stock upon the conversion of 12% convertible debentures and the exercise of warrants issued to certain stock investors. The sixth item is the approval of an adjournment of the 2023 annual meeting, today's meeting.
If the board determines that it's necessary or appropriate, if the quorum is present, to solicit additional proxies if there are not sufficient votes in favor of proposals three, four, and five at the time of the meeting. We will consider any other business that properly comes before the annual meeting. Due to the ongoing and recurring conditions of COVID that still exists out there, like today's meeting, as I mentioned earlier, I plan to read the resolutions into the record and ask for the motion to be moved and seconded. I declare the polls now open. The polls will remain open until all items of business have been presented and discussed. So item number 1 is the election of directors.
The first item of business, as described in the proxy statement that was mailed out or was posted on the Securities and Exchange Commission website, is of five directors of the company. The proxy statement was sent to you, as mentioned, and listed the company's nominees for directors, and those nominees are Mike Ciavarella, Paul Sallwasser, Steven Shallcross, Larry Flynn, David Aronoff. If elected, Misters Sallwasser, Shallcross, Flynn, and Aronoff, and myself will serve until the expiration of our respective terms or until our successors are duly elected and qualified. The board has made these recommendations with respect to board members and their experience and knowledge in the business of the company, and that are best suited to represent all of you.
I will now entertain a motion for adoption of a resolution approving that each of Misters Ciavarella, Sallwasser, Shallcross, Flynn, and Aronoff be and they be hereby appointed directors of the company to serve until the 2024 annual meeting of stockholders, or until their successors are elected and qualified. Would you mind-
Do you want me to move the motion?
Yeah, just move the-
Sorry. Mr. Chairman, I move that the resolution as read be adopted.
I second the motion. May I ask for a motion to close the proposal?
So moved.
I second the motion. A motion has been made and seconded to close the proposal. All those in favor signify by saying aye. Those opposed signify by saying nay. For the record, I now table a vote of proxies for each of the directors. All of the nominees have received at least one vote in favor of each nominee. The motion is carried and is moved that each of the director nominees is hereby elected and to serve as a member of the board of the company until the 2024 annual meeting of stockholders-
Participant listening.
Their successors are elected and qualified. Item number 2 on the agenda today, folks, is described in the proxy statement as the ratification of the appointment of BDO Limited as our independent public accountant for the fiscal year ended December 31, 2023. I will entertain a motion now for the adoption of a resolution to place before the meeting the Board's recommendation to ratify the appointment of BDO Limited as our independent public accountant for the fiscal year ended December 31, 2023.
Mr. Chairman, I move that the resolution as read be adopted.
I second the motion. May I ask for a motion as well, Julian, to close the proposal?
So moved.
I'll second the motion. A motion has been made and seconded to close this proposal. All those in favor signify by saying, aye, aye. Those opposed signify by saying, nay. For the record, I now table a vote of proxies of 21,307,666 shares of common stock, representing 98.5% of the votes cast. The motion is carried and is moved that the stockholders of the company approve the ratification of BDO AG as our independent public accountant for the fiscal year ended December 31, 2023. Item 3 on the agenda. The next item is, as described in the proxy statement, is the approval of the amendment of the 2018 Equity Incentive Plan for the reservation of 12 million additional shares of common stock.
The purpose of the plan is to attract and incentivize and retain qualified employees and consultants dedicated to achieving our corporate goals and objectives, and that help create shareholder value in the long, long term. I will now entertain a motion for the adoption of a resolution for approving the amendment of the 2018 Equity Incentive Plan and the reservation of an additional 12 million shares of common stock for issuance thereby, thereunder, being and is hereby approved and authorized in all material, material respects.
Mr. Chairman, I move that the resolution as read be adopted.
I second the motion. Can I also ask Julian for a motion to close that proposal?
So moved.
I second the motion. A motion has been made and seconded to close the proposal. All those in favor signify by saying aye. Aye, and all those opposed signify by saying nay. For the record, I now table a vote of proxies of 20,751,045 shares of common stock, representing 96.0%. The motion is carried, and it is moved that the stockholders of this company approve the amendment to the 2018 Equity Incentive Plan and the reservation of an additional 12 million shares of common stock for issuance thereunder. Item number 4 on the agenda. Item number 4 is the reverse stock split proposal.
As described in the proxy statement, is to authorize the board in its discretion, to implement one or more reverse stock splits of the company's common stock at a ratio of not less than 1-for-10 and not more than 1-for-10,000 in the aggregate, at any time prior to our next annual meeting of shareholders. Such amendment will be effective after stockholder approval, only in the event that the board of directors still deems it to be advisable. I will now entertain a motion for the adoption of a resolution approving one or more reverse stock splits of the company's common stock at a ratio of not less than 1-for-10 and not more than 1-for-10,000 in the aggregate, at any time prior to our next annual meeting of stockholders.
Such amendment to be effective after shareholder approval and only in the event that the Board of Directors still deems it advisable.
Mr. Chairman, I move that the resolution as read be adopted.
I second the motion. May I ask also for a motion to close the proposal, Julian?
So moved.
I second the motion. A motion has been made and seconded.
Participant exiting.
All those in favor signify by saying aye.
Aye.
And all those opposed signify by saying nay. And for the record, I now table a vote of proxies of 20,555,500 shares of common stock, which represents 53% of the issued and outstanding shares. The motion is carried and is moved that the stockholders of the company approve one or more reverse stock splits of the company's outstanding common stock at a ratio of not less than 1 to 10 and not more than 1 to 10,000 in the aggregate, at any time prior to our next annual meeting of stockholders. Such amendment to be effected after the approval of the stockholders and only in the event that the board of directors still deems it advisable. f 5, the stock issuance proposal.
This item, as described in the proxy statement, is to approve the issuance of common stock in the event of the conversion of the 12% convertible debentures and the exercise of the warrants that are associated to those debentures, issued to certain investors. I will entertain a motion now for the adoption of a resolution adopting the issuance of common stock upon the conversion of 12% convertible debentures and the exercise of warrants issued to certain investors.
Chairman, I move that the resolution as read be adopted.
I second the motion. Julian, may I also have a motion to close that proposal?
So moved.
And I second the motion. A motion has been made and seconded to close the proposal. All those in favor signify by saying aye. Aye, and all those opposed signify by saying nay. For the record, I table a vote of proxies representing 20,901,405 shares of common stock. That represents 96.6% of the votes cast. The motion is carried and is moved that the stockholders of the company approve the issuance of common stock upon the conversion of 12% convertible debentures and the exercise of warrants issued to certain investors. Item number 6 would be the adjournment. Although at this point we appear to have the votes in favor required for proposal number 3, 4, and 5, I'll abstain from holding the last item since it's covered.
Okay, so is there any other matters that are to be brought before the meeting today, Dylan?
No, there are not.
Okay, and none that we've heard. Mark, have you heard of any additional matters to be brought before the meeting today?
There's no additional matters.
Okay, so there appears to be no other matters to be voted on. Since there's no other matters, the polls are now closed, and we will now tabulate the votes on the items of business. Mark, please, can you collect those and begin tabulation of the votes?
Yes, Mr. Chairman. Okay, Mr. Chairman, and stockholders, the preliminary results based on the voting of shares represented by ballot proxies on file and tabulated this morning show that the stockholders of a plurality of the votes cast at the meeting have voted in favor of appointing the following individuals to the company's board of directors, Messrs. Ciavarella, Sallwasser, Shallcross, Flynn, and Aronoff. The board's request for approval of the ratification of BDO AG as the company's independent public accountant for the fiscal year ending December 31, 2023, has been approved with 21,307,667 shares of common stock, representing 98.5% of the votes cast for this matter.
For item number 3 , the board's request for approval of the amendment of the 2018 Equity Incentive Plan and the reservation of the 12 million additional shares of common stock for issuance under has been approved with 20,751,045 shares of common stock, representing 96% of the vote cast for this matter. As it pertains to item four, the board's request for approval of an amendment to restated certificate of incorporation to implement one or more reverse stock splits for the company's outstanding common stock at a ratio of not less than 1-for-10 and not more than 1-for-10,000 in the aggregate at any time prior to our next annual meeting of stockholders.
Such amendment to be effected after stockholder approval thereof, only in event of the board of directors so deem it advisable, has been approved with 20,555,500 shares of common stock, representing 53% of the votes cast for this matter. As it pertains to item number 5, the board's request for approval of the issuance of common stock upon the conversion of 12% convertible debentures and the exercise of warrants issued to certain investors.
Additional shares of common stock for issuance thereunder that, number one, the sale or issuance of, or potential issuance of common stock or securities convertible into, or exercisable for common stock at a price less than the greater of book or market value, which together with sales by our officers, directors, or substantial shareholders of the company, equal to 20% or more of common stock, or 20% or more of the voting power outstanding before the issuance, or two, the sale, issuance or potential issuance of common stock or security convertible into or exercisable into common stock equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the stock, has been approved with 20,901,405 shares of common stock, representing 96.6% of votes cast for this matter.
The board's request for approval of the adjournment was scrapped, so it's no longer applicable. There appears to be no. Sorry, Mr. Chairman, I will hand it to you.
Okay. All right. Thanks very much, Mark. I appreciate that. And I know, I know for all folks that have been listening in, it's been a bit challenging to, I've got some notes here that it was, excuse me, a bit challenging to hear. I hope everybody was able to hear the formalities. There appears now to be no further business to be brought before the meeting. So I'll now entertain a motion to adjourn the business agenda.
Mr. Chairman, I move that the meeting be adjourned.
I second that motion. It has been moved and seconded that the meeting be adjourned. All in favor, please signify by saying yes. Yes, aye. And all those opposed, signify by saying nay. So the motion is carried, and I declare the meeting adjourned. All right, so, first off, to all of our shareholders that joined today, I'd like to take this opportunity to thank you for your continued support and confidence in the company. I'm going to field a couple of questions that that did come up, mainly regarding, primarily, two parts. The first part, and I've summarized, because there are a number of questions that were very similar, in, in terms of, their context.
One was, as it relates to, the business of the company going forward, where we stand as an organization, and what we intend to do. And the second is in relation to the stock, the current listing venue, the reverse stock split, and so on. Okay, so those are the two, essential items that I'm going to, articulate a little bit here in Q&A. So the first one is, allow me to talk, a bit about what, the business of the company....
So as everybody knows, for the last 10 years, and we are coming up into the 10-year anniversary of the company when we started, and if everybody looks back, we did our first filing in January of 2014 regarding the company's acquisition of Multigioco S.r.l. in Italy, and joined on the call today is Alessandro Marcelli, who's been spearheading the operations out of our Rome office. We have taken that company in 2014 from about EUR 30+ million, close to EUR 40 million in handle or what we call sales in our business, and EUR 1 million in revenue to approximately EUR 800 million in handle and approximately EUR 50 million in revenue in the Italian market specifically. So we've done a remarkable job with our team there, led by Alessandro and the folks.
We've essentially reached the point where we've completed what I would say to you, a business roll-up. We feel very confident with the network that we've accumulated, customer base, et cetera. We made some significant changes in Q3 2023. As a result of the completion of that roll-up, we expect that over the remainder of 2023 and into 2024, we will likely experience some significant EBITDA margin as a result of those changes that we've made. And we should be reporting year-over-year improvements in terms of our bottom line, which I think was, again, one of the questions that were raised.
In terms of getting there, you know, part of building a business is important to make investments, investments that sometimes for the front end, cost you money, and those investments were for the future. The future of this company is now upon us with a recent transaction that we did here, as we moved the company into the North American markets. As many folks that have been with us for a number of years understand, we, for the last five years, have been building out our network in the U.S. and preparing for the Canadian market as well. Yes, we did not aggressively jump into the market like many of our peers did. Instead, we methodically sort of moved into the market by making strategic investments.
We've done some acquisitions, we've done some partnerships that are really quite significant. But allow me just maybe to speak towards one item. Just yesterday, we announced a marquee relationship with Caesars Entertainment. That is a key transaction that we did for our company, because we now feel very confident in the investments that we've made that have gotten us to today for the next 10 years. And I hope that resonates with long-term investors because the growth is in front of this company, not behind us. The transaction with Caesars Entertainment tells our stockholders that a Tier One operator has evaluated our business. We compete with that entity in our Washington, D.C. market, so they're well aware of our capabilities in this industry.
I'm sure that they would have a look at our Italian operations and our online capabilities. To that end, we've reached this initial deal, and we're going to continue to move forward as we expand our online distribution in the United States and Canada. If there's anything to say about what we've done as a management team is, we've essentially built the infrastructure and the business and made a significant number of investments to get to this point in time.
And now that we feel that we have all of those pieces of the puzzle in place, with a stable Italian market that doesn't need to be financed, if you will, for additional roll-up, I think that entity is in a very prime position right now and brings a lot of value to our company, particularly in light of a recent transaction in the Italian market, that saw the sale of SKS 365, which is one of our competing peers, to Lottomatica, which is one of our partners, and, for a very high sum of money. And it gives everybody an indication that just our Italian operations is worth significantly more than what our stock market valuation is trading at.
So I think this is no better time, there's no better time than the present, to consider a position in our stock. Second question, and this does tail to the second question, is regarding our listing venue. Many folks know, remember that in 2014, up until the end of 2019, just before COVID kind of took over the world, we were on the OTC Market, and we developed a lot of our infrastructure on the over-the-counter market. We uplisted in December 2019 to the Nasdaq. We were the first pure-play sports betting company. Don't listen to DraftKings; they were not the first play sports betting platform, we were. We were the first listed organization on a national exchange. We, in the United States, we're an American company with European, Canadian, and U.S. subsidiaries.
We then entered into a phase of COVID, which really substantially affected the world and our industry. I think this management team navigated that rather well. We actually increased our business. Moreover, as I mentioned at the first part of our, my answer, we really honed our skill on the online channel, and Alessandro and the team in Italy were able to multiply our online-facing operations, and we were able to improve, and not only improve our business, but also understand better how we can continue to grow the business, not only in Italy, but also in North America. At the end of 2020, sort of middle of COVID, we dual listed the company, became the first dual listed company in U.S. and Canada in terms of a sports betting entity.
And we had two markets going, so we're now both a Canadian and a U.S. reporting issuer as a result of that. Throughout the remainder of the past couple of years, we've been continuing to develop the company and its operations. Management has been totally focused on business development. Unfortunately, our market capitalization has suffered from a number of reasons. It's not for lack of continuously informing our investors of what the management was doing, the developments in terms of infrastructure, the developments of signing new contracts and opportunities, but it is the market, and the market is separate from the business itself.
Once again, as I mentioned at the top of this statement, there's no better time than now to improve your or at least add to your holdings. If you consider the release that we did yesterday, or the other day, which is really quite critical and important for what we do with all the investments that we've just recently made in these past 10 years. The agreement gives us a 10-year roadway to start opening up, at least in the Colorado market with this partner. The company is definitely exploring additional markets in the United States as well as Canada. That's all subject to regulatory approval. It's subject to our team's capability to prepare the platform for each one of the markets.
Let's keep in mind that we're in the sports betting business. It's a highly regulated business. In Italy, it's a federal law, federal license, so we get one license for the entire country, regardless of what province we operate in. But in the United States and Canada, it's a state-by-state process, so we need to do the application state by state, so we're subject to regulatory proceedings. Moreover, because of the Bradley Act and the Wire Act, we have to get geofencing for all of our online operations. So again, we are preparing our platform for each one of those jurisdictions that we determined to enter into.
Last but not least, up until now, I have not used forecasts and provided any sort of, let's say, be careful on choosing my words, I think, Julian. Let's just say I haven't used forecasting in our earnings. That doesn't necessarily mean that we're not now that we're comfortable with our positioning in the U.S. and Canada markets. So expect over the course of the next, in the next quarters and year-end, we'll likely start advising our audience of guidance of the company. But for today, I'm not going to put it on the table.
All I can say is that I feel extremely confident that within a very short period of time, we're going to be able to match and exceed our operating performance in the Italian market as we open up state by state in the United States. So that's my investor update, brief investor update, which is informal post-meeting. You know, what I'd like to do is, I'd like to thank again everybody for your attendance. And from all of us at Elys Game Technology, we wish you all a very pleasant rest of your day. Thank you.