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Commitments and Contingencies
6 Months Ended
Dec. 31, 2020
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 13 – Commitments  and contingencies 

 

Commitments

 

On October 1, 2019, the Company entered into a sponsorship agreement with an eSports team (the “Team”) in order to obtain certain sponsorship-related rights, benefits, and opportunities with respect to the eSports team. The term of the contract was from October 1, 2019 to June 30, 2022. The Company agreed to pay the Team $516,000 over the term of the contract and $230,000 worth of common stock. The stock is payable in 12 equal installments on the first day of each month. On August 6, 2020, the Company entered into an amended and restated sponsorship agreement whereby the Company agreed to pay a total of $2,545,000 in cash and $825,000 of common stock in tranches throughout the term of the contract which expires on January 31, 2023. The Company issued 33,333 shares of common stock to the Team under the agreement to-date valued at $21,000. As of December 31, 2020, the Company has accrued $196,423 as accrued expenses in relation to this agreement. For the three and six months ended December 31, 2020, the Company has expensed $418,954 and $649,833 in accordance with the agreement. As of December 31, 2020, the commitments under this agreement are estimate at approximately $1,250,000 for the calendar year ended December 31, 2021 and $1,500,000 for the calendar year ended December 2022.

 

On August 17, 2020, the Company entered into an agreement with Twin River Worldwide Holdings, Inc. (“Twin River”) that operates various online gaming and betting services in the state of New Jersey, USA. The organization will assist the Company in the operations and support to make available sports wagering to persons in New Jersey under the State Gaming Law. On the skin launch date (the “Launch Date”), which is expected to occur during the fiscal year ending June 30, 2021, the Company will pay the operator $1,500,000 and issue 50,000 shares of common stock. On each one-year anniversary of the Launch Date, the Company will pay an additional $1,250,000 and issue 10,000 shares of common stock. The agreement shall have a term of ten years from the Launch Date.

 

In the ordinary course of business, the Company enters into multi-year agreements to purchase sponsorships with professional teams as part of its marketing efforts to expand competitive esports gaming. As of December 31, 2020, the commitments under these agreements are estimated at approximately $700,000 for the calender year ended December 31, 2021, $700,000 for the calender year ended December 31,2022 and $700,000 for the calender year ended December 31, 2023.

 

Contingencies

 

In September 2018, Boustead Securities, LLC (“Boustead”) notified the Company of a claim that they were owed $192,664, as well as warrants to purchase 1,417,909 shares of the Company’s common stock as compensation for their acting as the placement agent for the sale of the Company’s securities between June 2017 and 2018. This matter was then brought to  arbitration pursuant to a clause in the placement agent agreement entered into by the Company and Boustead. Prior to the Arbitration hearing, Petitioner Boustead Securities, LLC offered a demand of nearly $500,000 to resolve the dispute. The offer was declined. The Arbitration hearing took place on December 7, 2020 through December 11, 2020. At the end of the Arbitration, Petitioner, Boustead Securities, LLC sought over $1.5 million in damages.

 

On February 3, 2021, the Arbitrator issued her final Award on the dispute. While ultimately, the Company did not prevail on liability, the Arbitrator awarded Petitioner, Boustead Securities, LLC significantly less in damages. In total, the Arbitrator awarded Petitioner Boustead Securities, LLC $289,874 in damages and allowable costs (not attorneys’ fees) with interest accruing approximately $21 per day. While the Company disagrees that the Arbitrator should have awarded Petitioner, it is highly unlikely that a award is subject to an favorable appeal or objection to Superior Court, however, the timeline do so has not passed. If no appeal is made by either party Petitioner Boustead Securities, LLC may seek to confirm the Arbitration Award as a Superior Court Judgment and seek collection efforts. The Company may in lieu of such seek to pay some discounted balance of the award. To date, no decisions have been made.

 

On August 3, 2020, Tangiers Global, LLC (“Tangiers”) filed a lawsuit in the United States District Court for the District of Nevada, entitled Tangiers Global, LLC, v. VGambling, Inc. et al, Case No. 2:20-cv-01434-APG-DJA. While filed in Nevada, the matter has now been successfully transferred to the District of Puerto Rico.  The new case number is 3:20-cv-01520-RAM.  The complaint for the lawsuit alleges, among other things, that the Company breached a certain 8% convertible promissory note, dated June 3, 2016, and Common Stock Purchase warrant of the same date.  The Company submitted an Answer with Affirmative Defenses.  The matter has not yet proceeded to the discovery phase, which is expected to begin in March, 2021. The Company believes the lawsuit lacks merit and will continue to vigorously challenge the action. At this time, the Company is unable to estimate potential damage exposure, if any, related to the litigation.

 

On November 2, 2020, Brylan Lee Whatley (“Whatley”) filed a lawsuit in the New York State Supreme Court, New York County, entitled Brylan Lee Whatley v. Esports Gambling Group, Inc. f/k/a VGambling, Inc., Index No. 655901/2020. On December 31, 2020, prior to serving the original Complaint, Whatley submitted an Amended Complaint in this matter. The Amended Complaint alleges that the Company breached a consulting agreement with Whatley.  The consulting agreement in question was never agreed to, or signed by, the Company.  For that reason, and in light of many other available legal defenses, the Company is submitting a Motion to Dismiss the Amended Complaint. The Company believes the lawsuit lacks merit and will vigorously challenge the action, in addition, to file any motions or counterclaims that may exist. At this time, the Company is unable to estimate potential damage exposure, if any, related to the litigation.