Following Record Revenue in Q4, Micro Cap Makes Market Disrupting Acquisition

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Thursday, March 25, 2021

The COVID-19 pandemic spurred disruption throughout all sectors as companies and consumers alike were forced to pivot due to social distancing, mass business closures and new health protocols which all combined to set the worldwide economy in to a tailspin in early-2020.

As is always the case in every major economic disruption, there will be companies that ultimately learn to adapt, pivot, and thrive during this new economic climate or ultimately succumb to the economic pressures and close down.

Owing to high internet penetration and increasing use of mobile devices for playing online games, the global online gaming market was already experiencing high growth in recent years. That growth was accelerated by the COVID-19 pandemic which forced people to seek entertainment from home, changing the market trajectory to what Grand View Research sees as expanding at a 11.5% compound annual growth rate to $127.3 billion by 2027.

The trend was already positive for gaming technology company Golden Matrix Group, Inc. (OTCPK:GMGI), a developer of mobile and desktop online gaming intellectual property and scalable white-label gaming platforms. Based in Las Vegas, the company is focused on hyper-growth areas, including Asia Pacific, Latin America, Africa and Europe.

For instance, Statista forecasts that gaming revenue in Latin America will climb from $2.23 billion in 2018 to $3.6 billion in 2023, with Mexico the largest market, followed by Brazil and Argentina. The report shows users of all levels hooked on mobile devices, as evidenced by more than 67% of respondents reporting playing mobile games for 40+ minutes daily.

Seeing the opportunity and recognizing that it needed a single point integration system to expedite international penetration, Golden Matrix this month agreed to acquire certain intellectual property of Gamefish Global Pty. Ltd., a premium casino game development company based in Sydney, Australia. In one savvy move, Golden Matrix added a fully functional seamless aggregation platform branded GMX-Ag to its portfolio for just $174,000 plus $39,150 for three months of support and undisclosed consulting fees with two principles of Gamefish.

With GMX-Ag, Golden Matrix will offer a diverse portfolio of gaming products on one single platform that can be integrated seamlessly with gaming operators’ existing business systems, and at the same time provide the operators with value-added features such as content aggregation and player acquisition & retention tools.

The benefits to Golden Matrix are multi-fold, including the ability to combine multiple categories and types of different content with a library of over 10,000 casino games from world-renowned gaming providers to form one of the most robust packages available. In addition to the existing proprietary content that drives revenue today for Golden Matrix, the mix provides customers seamless access to a diverse array of categories including Esports, sportsbooks, poker, slots, table games, live games, lottery, scratch cards, Keno and more.

With the acquisition, Golden Matrix can command a competitive pricing advantage through flat-rate bundles that provide customers top performing content at lower prices to what they’re currently paying. Adding to its edge, the company can differentiate itself from competitors by giving away the gaming system for free and only charging for the content. This is a market disrupting model considering operators today pay large fees for gaming systems and separately à la carte for content.

One particular advantage to the model is that once the easily scalable system is implemented with a customer, margins increase for GMGI with each content addition by the customer.

“We are confident that GMX-Ag’s white-labelled turnkey solutions will be popular in developing and regulated markets that are experiencing incredible growth,” said GMGI CEO Brian Goodman in a press release announcing the acquisition earlier this month. “We see this as the first of several transactions anticipated in 2021 that will help GMGI establish itself as a global presence in multiple gaming sectors, including regulated markets in Europe.”

The sportsbook component will be powered by Amelco UK Limited, a leading sports betting software and trading services provider that entered into a software license and services agreement with GMGI in October 2020.

In the coming quarters, investors will be watching for how the acquisition translates to sales and profits. The company has posted a string of improving quarters, including a record $1.9 million in revenue in the fourth fiscal quarter ended January 31, 2021 that was up 117% from the year prior quarter and outstripped management’s guidance for $1.7 million. If January is any indication, with revenue of approximately $740,000 for the month, 2021 could be a banner year.

2021 could also be transformational for the company with their recent announcement (March 19th) that they filed to offer shares in an underwritten public offering and applied to list its shares on the Nasdaq Capital Market under the symbol "GMGI."  A Nasdaq uplisting could expose the company to a larger pool of investors that tend to shy away from the OTC markets. All in all, 2021 is shaping up to be an exciting time for GMGI investors.

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