$EBET, a Nesting Doll of Self-Serving Officials and Stock Promotion
An in-depth look into why esports technologies is designed to fail in public markets
Please keep in mind that everything discussed in this document is for educational purposes only and is not a recommendation to buy or sell any securities. Everything contained is my personal interpretation of documents.
NASDAQ: EBET, Esports Technologies, Inc. is a newly founded and listed company, that operates online betting services to users.
$EBET, a Nesting Doll of Self-Serving Officials and Stock Promotion
I have evidence that Aaron Speach, the founder and CEO of esports technologies, alongside others, have used a number of acquisitions through shell companies to build up a massive undisclosed position in $EBET in warrants and convertible notes prior to IPO. I suspect that to enrich both himself and those around him, he took $EBET public with the intention to market the stock to retail investors and subsequently dump his large equity position for a massive payout, having no intention of building up a profit producing company.
This report is split up into a few sections, beginning with $EBET marketing material and social media.
The next section uncovers how Aaron Speach has used shell companies to purchase domain names from himself at elevated prices, while hiding his holdings of the warrants and convertible notes from the proceeds of the sale.
The following and final sections go over how Aaron Speach’s acquaintances benefit from the IPO of the stock, as well as red flags that appear in how esports technologies has raised capital.
A summary/tl;dr of the key points can be found at the end of this document.
Overview of IPO Presentation
Partners
Here are esports technology’s so-called partners
They are not partnered with these organizations and simply purchase their API services to get the betting odds
The only concrete propriety technology they claim to have is alterations to the odds provided by these APIs
In fact, if you compare their website against the advertised products of these APIs you get almost an exact replica. There is nothing special here.
There is no indication that any of this IP exists and upon closer reading, nothing is revolutionary to the betting scene.
Exchange engine seems to just be a crypto -> bet API support
Gaming models, I must say this one is quite hilarious, they state their edge in “rows of data” and “Mat Lab Prediction Code” as if that provides any evidence they have anything proprietary
Cash-out Betting, just a license
Loyalty & Rewards Engine, so nonspecific I have nothing to say
Social Media Reach and Red Flags
If we look at Gogawi, you can see that there is a clear lack of reach in their sole piece of IP
Based on articles https://techiazi.com/esports-technologies-relaunches-gogawi-com/ and the time before previous tweets, Gogawi was not in active operation prior to IPO, which should be worrisome to shareholders to say the least
Esports technologies itself displays something similar, with the account being created in December of 2020, just 4 months prior to IPO. With all its tweets promoting the stock.
Domain Purchase Agreements
Last year, ESEG limited, a subsidiary of Esports Technologies, acquired a number of domains for the astronomical prices shown below
This section documents how each of the shell companies which sold domains to ESEG (esports technologies) are connected to Aaron Speach and who is benefiting from these sales. It also covers the payments made to various consulting firms that helped establish these shell companies.
The following three companies have all been registered in the state of Wyoming.
Dover Hill LLC Filings
YSW Holdings Inc Filings
eSports Group Inc Filings
The three companies above were the original holders of the domains purchased by ESEG limited, a subsidiary of esports technologies. It appears that these subsidiaries are held by acquaintances of Aaron Speach, effectively allowing him to hold a large number of warrants and convertible notes through these sales.
Dover Hill LLC -> ESEG Limited (i.e. esports technologies)
T. Allen listed Seller
Owner DeAnna Montemayor via articles of incorporation
Geographically located next to YSW
Reported voting rights holder, Ryan Cravey, connection unclear.
https://contracts.justia.com/companies/esports-technologies-inc-12408/contract/163558/
YSW Holdings Inc -> ESEG Limited (i.e. esports technologies)
Chandler Weeks
Aaron Speach operates out of San Diego alongside other employees at esports technologies via their previous company ninthlink, see diagram below.
https://contracts.justia.com/companies/esports-technologies-inc-12408/contract/163560/
Esports Group Inc -> ESEG Limited (i.e. esports technologies)
Mervyn Friedlander listed as director/owner in business filing, also operates out of san diego.
https://www.ptindirectory.com/tax-preparers/california/san-diego-ca/215943/add-up-tax-solutions/mervyn-friedlander-ea confirmed to be person in question via email listed in articles of incorporation.
Reported voting rights Nicole Dumas, connection unclear.
https://contracts.justia.com/companies/esports-technologies-inc-12408/contract/163559/
Below we learn a little more about Keith Williams, who has signed for many of the filings. There is no identifying information on him however, not being listed as either an officer or director.
ESEG Limited
Signer is Keith Williams.
eSports technologies signer is also Keith Williams
Keith Williams, whom we can presume for now is the owner of ESEG limited and a friend
ESEG Limited also owned Gogawi Inc, esports technology’s main IP https://efiling.drcor.mcit.gov.cy/DrcorPublic/SearchResults.aspx?name=GOGAWI+ENTERTAINMENT+GROUP+LIMITED&number=%25&searchtype=optStartMatch&index=1&tname=%25&sc=0
Acquisition of ESEG by esports technologies gave Keith Williams/Aaron Speach 7,340,419 shares of common stock
These convertible notes and warrants, issued by esports technologies, through ESEG, benefited suspected acquaintances of Aaron Speech
Even more significantly, the low prices at which this debt converts indicates to us that the purpose of this debt is to hide a large equity position.
Gogawi Inc
Jody Allgood is a founder
ESEG owns Gogawi
This is the only piece of built-out IP that esports technologies owns
Crimson Investment Group and Crimson Consulting & Trade LLC sound suspiciously similar
Reported Holders who have been paid in equity for their services. These companies do not appear to have any real business and some of them have had their names changed recently/been established recently. Two of these companies have been registered/created by the same law firm.
Black Chip Holdings
Status had previously been permanently revoked (same registrar), but connection to other beneficiaries is not clear
Crimson Consulting & Trade LLC
Jody Allgood listed as Director, this guy is the same one who apparently cofounded Gogawi, his name is listed nowhere on the prospectus or any official documents provided by esports technologies
Jody Allgood received 1,258,250 shares via Crimson Consulting & Trade LLC
Shell company created by DEAN R. PATTI, ESQ.
Address listed in prospectus is false
Above is registered business address. It is the same as Crossover LLC, while the listed address points us to Sgro & Roger, Attorneys at Law who also seem to be the ones who created Crossover Co LLC
EBJT Management LLC
KEITH WILLIAMS listed as manager
Shell company created by KAEMPFER CROWELL, LTD
Keith Williams Received 1,729,484 shares via EBJT Management LLC, in addition to domain sale proceeds.
Prospectus address listed is false, address filed with Nevada Government points to 510 W FOURTH ST, Carson City, NV, 89703. Residential neighborhood
Crossover LLC
Shell Company Created by ANTHONY P SGRO
Crossover LLC and Crimson Consulting & Trade are both shell companies created by Sgro & Roger, Attorneys at Law
Address is openly used by esports technologies
Above references ESEG acquisition of YSW Holdings Inc, Esports Group Inc and Dover Hill LLC. As well as the notes and warrants they received through their domain sale.
Prospectus admits that Aaron Speach is a founder of ESEG Limited, presumably alongside Keith Williams
5% cap on ownership. However, Aaron Speach’s associates are the holders of these warrants as previously established.
These targets set for Aaron Speach are clearly unreasonable, which begs the question as to why he would be ok with receiving substantially less equity than other directors and officers. I find this to be further proof that Aaron Speach is the holder of the aforementioned warrants.
Private Placement Round
While not disclosed in SEC filings, Wilson Rondini has named himself as an advisor to esports technologies while being a managing partner at Falcon Capital.
While this in and of itself is not proof that Wilson Rondini is the owner of these privately held shares,
Rondini also served as an advisor to CNS Pharmaceuticals, a company of which director and audit committee chairman Christopher Downs is the CFO of.
It is also plausible that Jody Allgood received a portion of this placement as he works at an investment group, while also being closely tied to insiders.
The issue with this private raise is that it appears that the raise was done in order to give people associated with upper management of the company a substantially lower cost than the planned IPO price, affording them the opportunity to dump their shares for a large profit and hurting buyers of the IPO.
Employee stock benefits
While employees are not specifically named, here is a diagram of employees with direct relations to upper management (as documented from their linkedin profiles)
They are set to receive the following
Ninthlink
Looking at ninthlink, there is a clear presence of this former company in esports technologies, which should not be surprising because ninthlink did the initial branding for gogawi.
This highlights how closely tied Aaron Speach was with the IP which he used shareholder money to acquire as well as how he is continuing to provide business to himself.
Revenue, Expenses, Cash Flow and Fundraising.
1.6 million in SG&A which is explained by
1 million dollars paid out to consultant gets one set of paratheses and no explanation as to who or what the consultation was for. If you look at the information that has been already provided, you may have idea as to which people received these large payments
The most alarming thing, however, is esports technology’s raising of capital. In October-November of 2020, just half a year ago, they raised their first round with $4 million in seed money, and then again raising close to another million in January-February 2021. This, in conjunction with the large SG&A expenditures leads one to believe that the goal of this company to sell stock rather than produce profit, as there is no reasonable explanation for having to raise that quickly privately (far below IPO pricing) and then looking to go public with no real assets or revenues.
Summary
Esports Technologies (EBET) is a business that generates little to no revenue and claims to have IP that does not seem to exist. Beyond the point of valuation, EBET’s CEO seems to have built a substantial, undisclosed stake in the company through warrants and convertible notes. It appears that significant amounts of stock have been awarded to non-existent corporations/consultants, which have been created by a single law firm. The large amount of private funding, at levels far below the IPO price, just 4-6 months prior to EBET’s listing also raises questions as to why this company decided to IPO in the first place, beyond benefiting all of the people who have directly and indirectly received stock at extremely cheap prices.
great post. Do you have a twitter account?
great post. Do you have a twitter account?