Item
1.01 Entry into a Material Definitive Agreement.
December
2022 Offering
On
December 21, 2022, Esports Entertainment Group, Inc. (the “Company,” “we,” “our,” and “us”)
entered into a securities purchase agreement with an institutional investor (“The SPA”). The SPA relates to an offering of
(a) 7,065,000 shares of our common stock (the “Common Stock”), $0.001 par value per share, for a price of $0.0937 per share,
directly to the investor and (b) pre-funded warrants to purchase 17,850,000 shares of our Common Stock at a price of $0.0937 per warrant,
directly to such investor (the “Pre-funded Warrants”), with all but $0.001 per warrant prepaid to the Company at the closing
of the offering. The exercise price of each Pre-funded Warrant is $0.001 per share of Common Stock. The closing of the offering was completed
on December 21, 2022.
The
Pre-funded Warrants may not be exercised to the extent they cause the purchaser of the Pre-funded Warrants to become a “beneficial
owner” of more than 4.99% of our Common Stock for purposes of Section 13(d) of the Securities Exchange Act of 1934 (the “Beneficial
Ownership Limitation”). The Beneficial Ownership Limitation may be increased at the discretion of the purchaser of the Pre-funded
Warrants to any percentage less than or equal to 9.99% of our Common Stock upon 61 calendar days’ notice or decreased at any time.
We do not intend to list the Pre-funded Warrants sold in this offering on any securities exchange or other trading market.
The
net proceeds from the issuance and sale of the shares of Common Stock and Pre-funded Warrants, excluding the exercise of the Pre-funded
Warrants, was approximately $2,146,686, after deducting the estimated offering expenses payable by us. At the closing of the offering,
we remitted to the investor an amount equal to fifty percent (50%) of all the net proceeds from the sale of our common stock and Pre-funded
Warrants, or approximately $1,073,343. The amounts remitted to the investor will be applied to accrued interest and future interest payments
under the Senior Convertible Note. We will have broad discretion in the use of the remaining net proceeds upon satisfying our obligation
to the holder of the Senior Convertible Note and payment of offering expenses, including for working capital and general corporate purposes
to support ongoing business operations.
The
shares of Common Stock and Pre-funded Warrants sold by us have been registered pursuant to a registration statement on Form S-3 (File
No. 333-252370), which the Securities and Exchange Commission (the “Commission”) declared effective on February 5, 2021.
A prospectus supplement and accompanying base prospectus relating to the offering were filed with the Commission on December 21, 2022.
The
Securities Purchase Agreement contains customary representations and warranties and certain indemnification rights and obligations of
the parties.
A
copy of the legal opinion of Westward Law Group related to the shares of Common Stock sold in the offering is filed as Exhibit 5.1 hereto.
A copy of the legal opinion of Holland & Knight LLP related to the Pre-funded Warrants sold in the offering is filed as Exhibit 5.2
hereto.
Series
B Preferred Stock
On
December 20, 2022, the Company entered into a Subscription and Investment Representation Agreement with a member of management of the
Company, who is an accredited investor (the “Purchaser”), pursuant to which the Company agreed to issue and sell one hundred
(100) shares of the Company’s Series B Preferred Stock, par value $0.001 per share (the “Preferred Stock”), to the
Purchaser for $10 per share in cash, or $1,000 in the aggregate. The sale closed on December 21, 2022.
On
December 21, 2022, the Company filed a certificate of designation (the “Certificate of Designation”) with the Secretary of
State of Nevada, effective as of the time of filing, designating the rights, preferences, privileges and restrictions of the shares of
Preferred Stock. The Certificate of Designation provides that one hundred (100) shares of Preferred Stock will have 25,000,000 votes
each and will vote together with the outstanding shares of the Common Stock as a single class exclusively with respect to any proposal
to effect a reverse stock split of the Common Stock. The Preferred Stock will be voted, without action by the holder, on any such proposal
in the same proportion as shares of Common Stock are voted. The Preferred Stock otherwise has no voting rights except as otherwise required
by the Nevada Revised Statutes.
The
Preferred Stock is not convertible into, or exchangeable for, shares of any other class or series of stock or other securities of the
Company. The Preferred Stock has no rights with respect to any distribution of assets of the Company, including upon a liquidation, bankruptcy,
reorganization, merger, acquisition, sale, dissolution or winding up of the Company, whether voluntarily or involuntarily. The holder
of the Preferred Stock will not be entitled to receive dividends of any kind.
The
outstanding shares of Preferred Stock shall be redeemed in whole, but not in part, at any time (i) if such redemption is ordered by the
Board of Directors in its sole discretion or (ii) automatically upon the effectiveness of stockholder approval of the reverse stock split.
Upon such redemption, the holder of the Preferred Stock will receive consideration of $10 per share in cash, or $1,000 in the aggregate.
The
foregoing description of the SPA, Pre-funded Warrants, Subscription and Investment Representation Agreement and the Certificate of Designation
do not purport to be complete and are qualified in their entirety by reference to the full text of the SPA, form of warrant, Subscription
and Investment Representation Agreement and Certificate of Designation, which are filed as Exhibits 10.1, 4.1, 10.2 and 3.1, respectively,
to this Current Report on Form 8-K and incorporated herein by reference.