SEC Filing Summary
Filing identity: The request names Meridian Holdings Inc., but the supplied Form 10-Q is for Golden Matrix Group, Inc. (GMGI). The filing covers the quarter and six months ended January 31, 2018, corresponding to GMGI’s fiscal second quarter. It was signed March 12, 2018. Confirm the issuer and period before relying on this summary.
Business context and results
GMGI describes its business as software technology focused on social online gaming, with a stated focus on the Asian market. All reported revenue for the six-month period came from one related party, Globaltech Software Services LLC.
| Metric | Three months ended Jan. 31, 2018 | Six months ended Jan. 31, 2018 | Comparable 2017 period |
|---|---|---|---|
| Revenue | $30,000 | $60,000 | $30,000 quarterly; $60,000 six-month |
| Operating loss | $77,012 | $142,759 | $121,215 quarterly; $178,887 six-month |
| Net income (loss) | $84,484 | $(373,559) | $169,891 quarterly; $1,425,564 six-month |
| Operating cash flow | Not separately reported | $(56,359) | $(26,499) |
| Cash at period end | — | $6,808 | $13,797 at Jan. 31, 2017 |
Quarterly operating expenses were $107,012; the resulting operating loss was about 257% of revenue. Six-month operating expenses were $202,759, and the operating loss was about 238% of revenue. The filing does not present gross profit or a gross margin. Six-month financing activities provided $38,000, and cash declined by $18,359 from July 31, 2017.
Financial position, changes and dilution
- At January 31, 2018, current assets were $69,308 and current liabilities were $1,670,564, yielding a working-capital deficit of $1,601,256. Total assets were $69,308 and shareholders’ deficit was $1,601,256.
- Reported convertible notes, net of discounts, totaled $899,415, including $795,712 owed to a related party. The balance sheet also reported $155,533 accrued interest and $208,898 in derivative liabilities. Several notes were in default; specified default rates include 16% and 22% on certain notes.
- Revenue was unchanged from the comparable 2017 periods. Six-month operating expenses and interest expense declined, but the company moved from prior-year six-month net income of $1,425,564 to a net loss of $373,559. A major factor was the swing from a $1,144,313 derivative fair-value gain in 2017 to a $129,888 loss in 2018; debt-extinguishment gain also fell from $806,867 to $814. These items are non-operating and materially affect comparisons.
- Common shares outstanding rose from 141,096,983 at July 31, 2017 to 779,012,961 at January 31, 2018. The filing reports 1,557,662,161 shares outstanding as of March 7, 2018. During the six months, shares were issued for note conversions and to settle $60,000 of related-party payables.
- The January 2018 equity plan granted options over 1.29 billion shares to consultants and officers, subject to vesting and exercise terms. Subsequent to quarter-end, the company reported issuing 625 million shares to Luxor Capital, an entity wholly owned by the CEO, for gaming intellectual property.
Outlook, risks and unusual items
- Management states that the company’s ability to continue as a going concern depends on additional financing and, ultimately, achieving profitable operations through development of its gaming business. The filing says substantial doubt exists regarding the company’s ability to continue as a going concern.
- Management identifies the business as difficult to forecast and provides no quantified revenue, earnings, or cash-flow guidance. It notes delays in fully launching the social gaming platform.
- Subsequent events include a February 28 asset purchase from CEO-owned Luxor, a March 1 license arrangement with an affiliate, and reaffirmation of the operator services agreement with GameSparks, then described as an Amazon division. The license is to generate usage fees based on a percentage of monthly content and software usage; no amount is specified.
- Management reported disclosure controls were not effective as of July 31, 2017, citing the lack of independent directors and an audit committee financial expert, and inadequate controls to ensure required disclosures were addressed. It reported no significant subsequent changes to internal control.
- The company states it had no known legal disputes at the time of the report. It warns that forward-looking statements are subject to risks and uncertainty.
Important facts to verify
- Confirm that Golden Matrix Group—not Meridian Holdings—is the intended issuer, and verify the fiscal-period interpretation.
- Assess liquidity and financing needs against $6,808 cash, the $1.60 million working-capital deficit, going-concern disclosure, and defaulted notes.
- Review the related-party revenue concentration, $62,500 receivable from Globaltech, and related-party debt and service arrangements.
- Verify share counts and potential dilution from note conversions, the 1.29 billion options, and the subsequent 625 million-share IP purchase; assess the related-party transaction terms.
- Reconcile derivative-liability disclosures and earnings effects: the filing reports a $129,888 six-month fair-value loss, while quarterly figures show a $189,513 gain. Confirm the periods and classifications in the underlying statements.
- Evaluate the gaming platform’s launch progress, commercial traction, and whether forecasted customer and usage-fee revenues materialize.