Overview of High Roller Technologies, Inc.

High Roller Technologies, Inc. is an evolving and growth-oriented iCasino and entertainment company that focuses primarily on online casino betting in Europe and other markets. The company’s mission is to offer a superior customer experience through features like fast onboarding, secure payment processing, prompt payouts, generous bonuses, and responsive customer service.

The company was incorporated in 2021 and launched its HighRoller.com platform in 2022 to deliver more immersive real money gaming experiences. Prior to this, the company operated under the CasinoRoom.com domain. High Roller Technologies currently operates in several markets globally, with a focus on entering regulated markets in Europe, North America, and South America.

Financial Performance

For the nine months ended September 30, 2024, High Roller Technologies reported revenues of $19.8 million, down 12% from $22.5 million in the same period of 2023. This decrease was primarily due to the company’s exit from the Hungarian market in the second half of 2023, as well as decreases across some existing markets, partially offset by increases in Finland.

Revenue was flat for the three months ended September 30, 2024, decreasing less than 1% to $7.5 million compared to $7.6 million in the prior year period. The increase in Finland during Q3 2024 offset the impact of the Hungary exit.

The company’s largest markets by revenue are Finland (44% of total revenue in 9M 2024), New Zealand (24%), Norway (14%), and Canada (13%). The rest of the world accounted for the remaining 5% of revenue.

Expenses and Profitability

Direct operating costs, which include related party and other costs, decreased 4% to $9.8 million for the nine months ended September 30, 2024, compared to $10.1 million in the prior year period. This was driven by a 38% decrease in related party direct costs, partially offset by a 12% increase in other direct costs.

General and administrative expenses decreased 1% to $7.3 million in 9M 2024, as a 46% decline in related party G&A offset a 1% increase in other G&A. Advertising and promotions expenses decreased 57% to $5.8 million, with a 74% drop in related party costs and a 42% increase in other advertising costs.

Product and software development expenses increased 57% to $734 thousand, with a 23% rise in related party costs and a 95% increase in other development costs.

Overall, High Roller Technologies reported an operating loss of $3.8 million for the nine months ended September 30, 2024, compared to a $957 thousand loss in the prior year period. The increase in operating loss was primarily due to the decline in revenue, which was only partially offset by reductions in operating expenses.

For the three months ended September 30, 2024, the company reported an operating loss of $474 thousand, compared to a $185 thousand loss in the same period of 2023. The higher loss was again driven by the revenue decline, which was not fully offset by expense reductions.

Liquidity and Capital Resources

As of September 30, 2024, High Roller Technologies had $1.3 million in cash and cash equivalents, excluding customer deposits and restricted cash. This represents a decrease from the $2.1 million in cash and cash equivalents as of December 31, 2023.

For the nine months ended September 30, 2024, the company used $1.4 million in net cash from operations, compared to $579 thousand provided by operations in the prior year period. This negative cash flow from operations, along with $325 thousand used in investing activities, resulted in a $1.1 million decrease in total cash and restricted cash during the period.

The company’s working capital position has deteriorated, with negative working capital of $8.8 million as of September 30, 2024, compared to negative $4.6 million at the end of 2023. This reflects the company’s reliance on short-term financing and related party support to fund its operations.

In June 2023, High Roller Technologies entered into a debt conversion agreement with related parties to issue 631,809 shares of common stock in exchange for $5 million owed. As of September 30, 2024, the company owed its related party Spike Up Media approximately $421 thousand.

The company’s independent auditor has expressed substantial doubt about its ability to continue as a going concern, noting that the company’s ability to do so is dependent on its ability to obtain necessary financing and generate sustainable profitable operations in the future. Management’s plan is to raise additional equity capital through private placements or public offerings to fund the company’s capital requirements and development.

Strengths and Weaknesses

Strengths:

• Established presence in several regulated online gaming markets, particularly in Europe
• Diversified revenue streams across multiple geographic regions
• Scalable technology platform that supports the launch of new brands
• Affiliation with Spike Up Media, a leading provider of high-quality, cost-effective customer acquisition

Weaknesses:

• Reliance on related party financing and services, which raises concerns about independence and sustainability
• Declining revenue and operating losses, indicating challenges in the core business
• Negative working capital position and doubts about the company’s ability to continue as a going concern
• Exposure to regulatory risks in the online gaming industry, as evidenced by the exit from Hungary

Outlook and Future Prospects

High Roller Technologies’ future prospects will depend on its ability to stabilize and grow its revenue, improve profitability, and secure sufficient financing to fund its operations and expansion plans.

The company’s strategy of launching new brands using its existing resources and licenses could help it access new target demographics and generate additional revenue. However, the success of this strategy is not guaranteed, and the company may face challenges in converting marketing spend into new player acquisition or reactivation.

The company’s plan to enter regulated North American markets within the next 12 months, if successful, could provide a significant growth opportunity. However, the company has not identified any specific target markets or budgeted any amounts for such expansion, and there is no assurance that these efforts will prove successful.

Overall, High Roller Technologies faces significant challenges in the near term, as evidenced by its declining revenue, operating losses, and doubts about its ability to continue as a going concern. The company’s ability to secure additional financing and execute its growth strategies will be crucial in determining its long-term viability and success.