Sports Entertainment Gaming Global (SEGG) announced that its financial statements for the years ended December 31, 2021, and 2022, should no longer be relied upon. This is due to the discovery of a fraudulent scheme by former executives involving circular transactions in 2020 and 2021 that improperly inflated revenue and the acquisition cost of Global Gaming Enterprises, Inc.
Key Details
- Non-Reliance & Restatement: Financials for 2021 and 2022, along with interim 2022 reports (the "Affected Reports"), will be restated. Financials for 2023-2025 will be corrected but are not considered unreliable.
- Fraudulent Transactions: The scheme involved improperly recording a $9 million transaction as revenue and cash in 2020/2021. These funds were then used to overstate the acquisition cost of Global Gaming in June 2021.
- Financial Impact: The restatement will decrease previously reported revenue, cash, goodwill, and intangible assets, primarily impacting the 2020 and 2021 balance sheets and results of operations. For later periods (2022-2025), the corrections will reduce amortization and impairment expenses, thereby reducing previously reported net losses.
- Former Management: The company states that former executives, who are no longer with the company and are facing legal consequences including prison sentences and guilty pleas, orchestrated the transactions. Current management was not involved.