APPLE ISPORTS GROUP, INC. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
Stock Exchange Agreement
Effective
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Immediately prior to the closing of the Stock Exchange Agreement, we had
7,640,211 million shares of our common stock,
The Stock Exchange Agreement contained customary representations and warranties and pre and post-closing covenants of each party and customary closing conditions. The share exchange is intended to be treated as a tax-free reorganization under the Internal Revenue Code of 1986, as amended.
The issuance of our common stock to AiS shareholders in connection with the
Stock Exchange Agreement was not registered under the Securities Act, in
reliance upon the exemption from registration provided by Section 4(a)(2) of the
Securities Act, Regulation D promulgated by the
Pursuant to the Stock Exchange Agreement, we acquired the business of AiS, which has developed and continues to develop a multi-faceted sport betting platform. As a result, we have ceased being a "shell company."
The Stock Exchange Agreement is filed as an Exhibit 2.1(i) to this Report and the information contain herein with respect to the Stock Exchange Agreement is qualified in its entirety by reference to the Stock Exchange Agreement.
Accounting Treatment; Change of Control
The transaction was accounted for under the business combination under common
control of accounting. Consequently, the assets and liabilities and the
historical operations that will be reflected in the financial statements prior
to the
As a result of the issuance of the shares of our common stock pursuant to the Stock Exchange Agreement, a change in control of the Company occurred as of the date of consummation of the Stock Exchange Agreement.
We continue to be a "smaller reporting company," as defined under the Exchange Act, following the Stock Exchange Agreement.
Change in Shell Company Status
Prior to the
Immediately following the
With the resulting change in our business, we are providing the information as is required pursuant to Item 2.01(f) of Form 8-K as if we were filing a general form for registration of securities on Form 10 under the Exchange Act for our Common Stock, which is the only class of our securities subject to the reporting requirements Section 15(d) of the Exchange Act upon consummation of the Stock Exchange Agreement.
Change in Fiscal Year End.
In connection with this transaction, the Company elected to change its fiscal
year end from
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DESCRIPTION OF OUR BUSINESS
Our corporate structure is depicted below:
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Industry Terms.
Pari-mutuel Betting - All the bets/money placed on an event are aggregated into a single pool of money, the "take-out" (by the totalizator operator) is subtracted and dividends (distribution to bettors) are calculated by dividing the pool between winning bets based on their odds. The returns are subject to the calculation of dividends after the conclusion of the race. Before the market closes approximate dividends can be displayed but the final dividend can change after wagers are placed. Typically, pari-mutuel betting is used in thoroughbred horse racing, greyhound racing and harness racing among others races and other events.
Tote Derivative - Bets are paid out at a price declared by one or more pari-mutuel (totalizator) providers. Typically, this type of betting is seen in exotic bets (trifectas, quinellas, daily doubles, etc.) in racing.
Fixed Odds Betting - The oddsmakers set odds for bettors to wager on. Once bettors place their wagers, they're locked into the odds that they've chosen. So, when bettors place their bets, they know their return in the event of a winning bet. This type of betting is the most common type seen in sporting events.
Advanced Deposit Wagering (ADW) - the type of account where the bettor (customer) must fund before placing a wager.
Apple iSports Business History
On
AiS has been engaged in the development of a content, digital sports betting and gaming platform. Our platform, when complete, will provide users with daily sports betting, fantasy sports and sport streaming solutions. Our aim is to create excitement and engagement and deliver the best experiences that enhance sports fandom. Users will be able to access our products via multiple devices including the web and mobile devices.
AiS maintains a provisional Northern Territory Online Bookmaking License in
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Our two primary markets are
Since our inception, we have achieved the following milestones:
· Since inception of AiS, we (i) established a core team with the industry
skills and experience to manage the Company and (ii) we received
$1,300,000 in private placement funding and received loans from related
parties in excess of $800,000 ;
· From December 2021 to May 2022 , we developed our Go to Market outline and
marketing strategy, including identifying preferred suppliers for each
product and initiating relationships with key suppliers and consultants;
· In February 2022 , we launched a content-rich blog site on the
appleisports.com domain and initiated search engine optimization
activities to increase the search performance of our site on Google
search;
· In April 2022 we reached an agreement with a leading provider of
Australian racing data and form information for use on our horse racing
platform;
· In April 2022 , we completed and submitted our application for a Northern
Territory (NT) Online Bookmaking license. We appeared before the NT Racing
Commission in May 2022 to present our application for approval. We expect
the license to be issued in second calendar quarter of 2023;
· In June 2022 , we submitted our application to the North Dakota Racing
Commission for an Advanced Deposit Wagering (ADW) license, subject to
approval of Thoroughbred Racing Protective Bureau . In parallel, we
initiated a Thoroughbred Racing Protective Bureau (TRPB) examination
process. The TRPB provides integrity reporting to regulators administering
ADW licenses. We expect the TRPB examination to be completed in Q2 2023.
Completion of the TRPB examination is required to receive a state issued
ADW; and
· In October 2022 we engaged a leading provider of white-label sportsbook
platforms and began customization and integration with key components
(KYC, payments, CRM, credit card verification) and data feeds. The
expected completion is June 2023 for launch in July 2023 .
Our address is L7,
Our Apple iSports Platform
Our Apple iSports platform will feature the following "apps":
? Sport Betting ? Horse Racing ?Fantasy Sports ? 24/7 FAST Sports Channel ? Free to Play games 6 These individual apps are further described below: The Sports Betting App. The Sports Betting App will provide betting coverage for many major sporting leagues and events, including but not limited to, theNational Football League (NFL), Australian Rules Football (AFL), MajorLeague Baseball (MLB), theNational Basketball Association (NBA), as well as for other sports, such as Cricket, Golf, Ice Hockey, Soccer, and Tennis. Sports betting, at its simplest, is placing a financial wager on the outcome of a sporting game or match, including certain events that occur within such game or match. The app will feature
[[Image Removed: pvnc_8kimg13.jpg]] functionality designed to provide a
personalized customer experience. The app
will be capable of taking and placing a
variety of betting types and
combinations. A representative depiction
of the main page of this app is displayed
on this page.
These betting opportunities will be fixed
odds bets which means that we will set
the odds for each such event. There is a
market ratio in each market offered to
our customers which is the average level
of profit over every proposition in the
market. We will manage our margins
through our smart technologies and
traditional risk management
methodologies. The odds in each market
should appeal to our customers while we
derive managed revenues.
As of the date of this filing, the Sports Betting app is approximately 70%
complete. We anticipate the completion of this app in
Horse Racing App. We will provide advanced informatics to the user. Our analysis and insights will include race and individual rankings, margins from winner, speed maps and race analysis. We also will provide live updates for scratches, jockeys, prices, track conditions and race start time changes.
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A representative depiction of the main page of this app is displayed below:
In Australia , racing wagering will
include fixed odds and tote derivative
betting. We derive revenues based on the
management of risk. In the United States ,
initially, racing wagering will consist
of participating in pari-mutuel pools.
As of the date of this filing, the Horse
Racing app is approximately 80% complete.
We anticipate completion in June 2023 .
The sports and racing offerings are being
developed in parallel on the same core
platform. This allows for a single
sign-on which gives the advantage of
being a tightly integrated and unified
customer information database.
Fantasy Sports App. Fantasy Sports App is
based on real-life sports matches,
including racing, and novelty games.
Participants build virtual teams with
proxies of real players participating in
an upcoming match (or match-day) and
compete on real-world statistical
performances of those players, based on
one or more complete officially
sanctioned sports matches. This allows
users to emulate the role of a coach or a
manager of a team, with the power to
drop, recruit, or trade a player of their
choice. Changes are locked before a match
kicks-off. We believe that, for some
users, it is about deeper engagement with[[Image Removed: pvnc_8kimg14.jpg]] the sport, beyond viewership; for other
users, it is about the competition and
strategy that it involves.
Fantasy sports is exciting to players and
is distinct, as it is based on real-life
sporting events, offers meaningful
engagement with sports, and there is no
simulated gameplay involved. Fantasy
sports allows users to create virtual
teams with real-life sports players
participating in a real-world sporting
event. They then compete in a where the
team's performance is based on the actual
statistical performance of the player
from across real sporting events for the
given sports match. Users are then ranked
based on the performance of their virtual
teams during the sports match or the
tournament.
To create their virtual teams, users, to
create their virtual teams, operate with
a limited virtual budget. The allocated
virtual spend capacity per team and
virtual price tags on players form
boundary conditions for building the
team, where top-ranked players have high
price-tags attached to them and the value
varies based on the player's real-world
rating/ rankings. To add another layer of
complexity, certain conditions are
imposed such as prohibiting the selection
of more than a certain number of players
from the same team, or position.
Users win points based on how well the selected players perform during the real-life sports event. The eventual outcome of the match might not be the focus for users, rather what matters is the individual performances of selected players in the real-life event. Performance is often indicated by parameters such as runs scored, yards gained, goals assisted and the like. The user, in effect, takes the virtual role of a sports team manager or coach to build the most effective team for a given sporting event. The virtual team's success is based entirely on the actual performances of the real-life players in each event. The user's knowledge of the sport becomes key to selecting the fantasy/virtual team and to achieving success in the particular fantasy sport.
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An example fantasy sport screen from our fantasy sport platform provider is displayed below:
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Upon enrollment in a fantasy sport event, users will have an option to choose between a subscription and a pay per contest payment model. For a pay-to-participate contest, we will receive a fee, generally a percentage of the total dollar collections per contest, with the remainder of the collections allocated to the prize pool.
There are 22 States in
As of the date of this filing, the Fantasy Sports App is approximately 80%
complete. The completion is expected in
24x7 FAST Sports Channel. Our 24x7 Channel will provide great value to the Apple iSports brand. Users will be able to watch a wide range of live sporting events and sports-based shows. We believe this feature will promote more betting by users. The Channel will have up to 8 minutes per hour of advertising space and we intend to sell this space to generate revenue. Any unsold ad space will be used to promote other Apple iSports offerings.
The Sports Channel will be available on the Apple iSports web sites, as well as on a range of distribution platforms such as regional cable, satellite television, FAST-channels, subscription services and paid video on-demand services. We expect that some of these distribution apps will pay syndication fees for the right to broadcast our Sports Channel. In such an instance, we would only receive a portion of advertising revenue generated.
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An example app is displayed below:
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An important part of AiS' growth strategy is to develop additional revenues via cross-selling pathways. User acquisition and retention of subscribers will require a variety of loyalty offerings, lower prices or using more ad-supported models. By exploring freemium pricing, microtransactions, and subscription services, AiS streaming video services could expand audiences and increase engagement through more diverse experiences.
As of the date of this filing, 24x7 Sports is expected to go live in
Free to Play App. We plan to offer "free-to-play" games to entice users to visit our website and mobile platforms, which will develop brand loyalty so that in the future they will use our site to meet their gaming needs. This strategy is an entry point to the brand, gaining customer experience, achieving a positive impression of the brand image, and creating customer engagement.
We believe "free-to-play" is an essential marketing investment to grow awareness of our brand and indirectly impacts revenue performance, even though there is no fee or charges applied in the application, by building an engaged, enthused user base that can be readily transitioned to paying customers when we are able to offer services in their jurisdiction. This app will be provided for free across our desktop and mobile platforms.
Based on our observations of the experiences of other industry providers, we expect free-to-play users to migrate to our various betting or fantasy apps.
As of the date of this filing, "free to play" for the NFL is substantially
complete and will be rolled out on appleisports.com in the second quarter of
calendar year 2023. This offering can be made in all geographical markets
including those states in the
LICENSES, ITS BUSINESS, FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS PROSPECTS COULD BE IMPAIRED. Our ability to grow its business will depend on its ability to obtain and maintain licenses to offer its product offerings in a large number of jurisdictions or heavily populated jurisdictions. If we fail to obtain and maintain licenses in large jurisdictions or a greater number of mid-market jurisdictions, this may prevent us from expanding the footprint of its product offerings, increasing its user base and/or generating revenues. We cannot be certain that it will be able to obtain and maintain licenses and related approvals necessary to conduct its online sports betting operations. Any failure to obtain and maintain licenses, registrations, permits or approvals could have a material adverse effect on its business, financial condition, results of operations and business prospects.
IN SOME JURISDICTIONS OUR KEY EXECUTIVES, CERTAIN EMPLOYEES OR OTHER INDIVIDUALS RELATED TO THE BUSINESS ARE SUBJECT TO LICENSING OR COMPLIANCE REQUIREMENTS. FAILURE BY SUCH INDIVIDUALS TO OBTAIN THE NECESSARY LICENSES OR COMPLY WITH INDIVIDUAL REGULATORY OBLIGATIONS, COULD CAUSE THE BUSINESS TO BE NON-COMPLIANT WITH ITS OBLIGATIONS, OR IMPERIL ITS ABILITY TO OBTAIN OR MAINTAIN LICENSES NECESSARY FOR THE CONDUCT OF THE BUSINESS. IN SOME CASES, THE REMEDY TO SUCH SITUATION MAY REQUIRE THE REMOVAL OF A KEY EXECUTIVE OR EMPLOYEE AND THE MANDATORY REDEMPTION OR TRANSFER OF SUCH PERSON'S EQUITY SECURITIES. As part of obtaining real money gaming licenses, the responsible Gaming Authority will generally determine the suitability of certain directors, officers and employees and, in some instances, significant stockholders. The criteria used by Gaming Authorities to make determinations as to who requires a finding of suitability or the suitability of an applicant to conduct gaming operations varies among jurisdictions, but generally requires extensive and detailed application disclosures followed by a thorough investigation. Gaming Authorities typically have broad discretion in determining whether an applicant should be found suitable to conduct operations within a given jurisdiction. If any Gaming Authority with jurisdiction over our business were to find an applicable officer, director, employee or significant stockholder is deemed by competent authorities to be unsuitable for licensing or unsuitable to continue having a relationship with us, we would be required to sever its relationship with that person. Furthermore, such Gaming Authorities may require us to terminate the employment of any person who refuses to file required applications. Either result could have a material adverse effect on our business, operations and prospects.
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Risks Related To Our Securities
WE WILL NEED TO RAISE ADDITIONAL CAPITAL. IF WE ARE UNABLE TO RAISE ADDITIONAL CAPITAL, OUR BUSINESS MAY FAIL. We will need to raise additional capital to fund our ongoing operations. We have no cash on hand nor any working capital. To secure additional financing, we may need to borrow money or sell more securities. Under the current circumstances, we may be unable to secure additional financing on favorable terms, if available at all.
OUR NEED FOR CAPITAL WILL CREATE ADDITIONAL RISKS AND CREATE POTENTIAL
SUBSTANTIAL DILUTION TO EXISTING SHAREHOLDERS. As mentioned above, we will need
to raise additional capital in the future. These capital expenditures are
intended to be funded from third party sources and from affiliates if available,
including the incurring of debt (which may be converted into common stock)
and/or the sale of additional equity securities. As of
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