S-1/A: High Roller Technologies Files for $13.5 Million IPO, Aims for NYSE American Listing

High Roller Technologies, an online gaming operator, is seeking to raise $13.5 million through an initial public offering and list its common stock on the NYSE American under the ticker symbol HRLR.

Summary

• High Roller Technologies, Inc., an online gaming operator, has filed an amendment to its S-1 registration statement for a firm commitment initial public offering.
• The company plans to offer 1,500,000 shares of common stock, with an anticipated initial public offering price between $8.00 and $10.00 per share.
• High Roller Technologies has applied to list its common stock on the NYSE American under the symbol HRLR.
• Net proceeds from the offering are estimated to be $11.6 million, or $13.5 million if the underwriters exercise their over-allotment option in full, assuming an initial public offering price of $9.00 per share.
• The company intends to use the net proceeds for marketing, promotion, advertising, expansion into North American and other new markets, ongoing development of the platform, gaming licenses, computer software, and general corporate and working capital purposes.
• High Roller Technologies operates a real money online casino platform, offering over 3,000 games from more than 50 providers.
• The company launched its premium brand HighRoller.com in January 2022, replacing its legacy iCasino brand, CasinoRoom.com.
• The total addressable worldwide gambling market (TAM) in 2022 was estimated to be $460 billion, with iGaming exceeding $111 billion, and is expected to grow to $621 billion by 2026, with online gaming accounting for $183 billion.
• The company's growth strategy includes attracting new players, engaging existing users, entering new geographical markets, and implementing a multi-brand strategy.
• High Roller Technologies soft launched its second brand, Fruta.com, in December 2023 and plans a full launch in Q1 2024.
• The company operates in both pre-regulated and regulated markets, using proceeds from pre-regulated markets to invest in regulated markets.
• The company's financial statements have been prepared on a going concern basis, and its financial condition creates substantial doubt about its ability to continue as a going concern.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While the company shows revenue growth and strategic initiatives, the going concern warning and competitive risks temper the overall outlook.

Positives

• The company has a growth strategy that includes attracting new players, engaging existing users, entering new geographical markets, and implementing a multi-brand strategy.
• The company operates in both pre-regulated and regulated markets, using proceeds from pre-regulated markets to invest in regulated markets.
• The company's platform offers a wide array of popular and exciting casino games from over 50 leading third-party game developers.
• The company is implementing a multi-brand strategy, facilitated by its in house developed scalable CMS and frontend that allows it to scale its business by duplicating its Platform strengths across multiple domains with individualized branding and different target markets.

Negatives

• The company's financial statements have been prepared on a going concern basis, and its financial condition creates substantial doubt about its ability to continue as a going concern.
• The company faces intense competition in the online casino gaming industry.
• The company has a limited history of operations and financial information on which to assess its current business strategy.
• The company's growth prospects depend on the legal status of real-money online iCasino gaming in various jurisdictions, and legalization may not occur as expected.
• The company relies on third-party service providers, and their failure to perform adequately could adversely affect the company's business.
• The company identified material weaknesses in its internal control over financial reporting.

Risks

• Intense competition in the online casino gaming industry may hinder the company's ability to attract and retain users.
• A limited history of operations and financial information makes it difficult to assess the company's current business strategy.
• The company's financial statements have been prepared on a going concern basis, and its financial condition creates substantial doubt about its ability to continue as a going concern.
• The success of online wagering products depends on various factors and is not completely controlled by the company.
• Failure to detect fraud or theft could harm the company's reputation and negatively impact its business.
• Inability to offer additional new and exciting gaming products may hinder the company's growth prospects.
• Recruitment and retention of executives and key employees are vital to growing the business.
• Changes in tax laws could result in additional tax liabilities.
• Business operations are currently located outside of the United States, which subjects the company to additional operational and regulatory risks.
• Negative publicity or an adverse shift in public opinion regarding online casino wagering may adversely impact the business.
• The company is subject to a variety of United States and foreign laws, many of which are unsettled and still developing.
• Growth prospects depend on the legal status of real-money online iCasino gaming in various jurisdictions.
• Failure to comply with regulatory requirements or to successfully obtain licenses or permits could adversely impact the company's ability to operate.
• The company relies on information technology and other systems and platforms, and failures, errors, defects or disruptions therein could diminish the brand and reputation.
• Product offerings and other software applications and systems could contain undetected errors.
• Information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error.
• The company relies on third-party payment processors to process deposits and withdrawals made by users on the platform.
• The company relies on other third-party service and content providers, and if those third parties do not perform adequately or terminate their relationships, the company's costs may increase.
• If internet and other technology-based service providers experience service interruptions, the company's ability to conduct business may be impaired.
• The company identified material weaknesses in its internal control over financial reporting.
• The company may require additional capital to support growth plans, and that capital may not be available on terms acceptable to the company.
• Economic downturns and political and market conditions beyond the company's control could adversely affect the business.
• The lack of public company experience of the management team could adversely impact the company's ability to comply with the reporting requirements of U.S. securities laws.
• The company may encounter difficulties in managing growth.
• There has been no prior public market for the company's common stock.
• Investors in this offering will experience immediate and substantial dilution of $7.18 per share.
• The amended and restated certificate of incorporation designates the Chancery courts of Delaware as the exclusive forum for certain litigation that may be initiated by stockholders.

Future Outlook

High Roller intends to achieve rapid, cost efficient and sustainable growth by utilizing high margin cash flow generated from online casino operations in its current international markets where it operates and to enter and grow sustainable revenues in newly regulated and soon to be regulated markets.

Management Comments

• Management believes that this strategy mitigates any material negative impact on operations or financial position by leveraging scalable processes and technologies within our Platform.
• Management anticipates that the launch of additional brands will provide access to new target demographics and generate added revenue through existing player acquisition channels while maintaining the current cost structure with nominal incremental costs.

Industry Context

The iGaming market is experiencing substantial growth, driven by technological advancements and increasing regulation. High Roller Technologies aims to capitalize on this trend by expanding into new markets and offering innovative gaming experiences.

Comparison to Industry Standards

• The document mentions that the total addressable worldwide gambling market (TAM) in 2022 was estimated to be $460 billion of which iGaming is estimated to exceed $111 billion or about 24% of TAM.
• The market is expected to grow to $621 billion by 2026, of which online gaming is expected to account for $183 billion or about 30% of TAM.
• This estimated growth in the iGaming market represents a compound annual growth rate, or CAGR, of 8.9%.
• The document does not provide specific comparisons to individual companies or projects.

Management Changes

Legal Proceedings

• Ellmount Entertainment, Ltd., a subsidiary of the Company, has litigation pending in Austria and Germany regarding player claims and related legal fees totaling approximately $82,000.
• The Company is also currently subject to administrative claims initiated by the Czech Ministry of Finance regarding the operation of gaming activities in 2018 without a license and has been ordered to pay a fine of approximately $216,000, which is under appeal.

Related Party Transactions

• The company has engaged in transactions with affiliates, such as Happy Hour, Spike Up Media, Ellmount Interactive and other related parties, to operate online gaming.
• Certain games on the company's websites are provided by a range of third parties through nominee agreement with Happy Hour Solutions Ltd., a wholly owned subsidiary of Happy Hour Entertainment Holdings Ltd., one of the company's principal shareholders.
• Lead generation for the High Roller and for Casino Room platforms are supplied to the company in part by Spike Up Media Spike Up Media is a wholly owned subsidiary of Ellmount Interactive A.B. which is beneficially owned by OEH and Cascadia, two of the company's principal shareholders.
• Daniel Bradtke, a principal of Happy Hour Entertainment, is one of the company's directors.
• Spike Up Media owns an approximate eight percent ownership interest in Happy Hour Entertainment.

Stakeholder Impact

• Shareholders will experience immediate and substantial dilution of $7.18 per share.
• The company's ability to attract and retain users is critical to its success.
• The company's growth prospects depend on the legal status of real-money online casino gaming in various jurisdictions.
• The company's reliance on third-party service providers could impact its ability to operate effectively.

Next Steps

• The company plans to launch Fruta.com in Q1 2024.
• The company intends to seek entry into one or more regulated North American markets utilizing proceeds from this offering.
• The company expects to launch at least one new iCasino brand over approximately the next twelve months to expand market share in existing markets and reduce customer acquisition cost and attrition rates.

Key Dates

Keywords

iCasino, online gaming, IPO, High Roller Technologies, HRLR, initial public offering, gaming, casino, NYSE American, stock