Online gaming, Ciavarella (CEO Empire Global): “Acquisition of Multigioco first step; 50 million to invest in Italy”

ROME – It was the first major hit of the year in the online gaming industry, with signs of a series of mergers and acquisitions in the coming months. Empire Global Corporation – a company based in Toronto and quoted on the OTC Market in New York – in a one million euro transaction, has discreetly acquired Multigioco Srl. a licenced online gaming operator in Italy, with five physical gaming centres in Italy made up of corners and agencies and more than 700 online web shops that produced over 71 million euro in turnover through 2013. Agipronews met the CEO of Empire Global, Michele “Mike” Ciavarella; an Italian-American entrepreneur in Rome outlining goals for Italy.

Mr. Ciavarella, why has Empire Global decided to enter the Italian market?

The Italian gaming market is a large, maturing and well-regulated market. We believe it is the right framework for a company like Empire Global, listed on an international stock exchange, seeking a safe and regulated gaming environment. The acquisition of a company such as Multigioco – with an excellent reputation and a young and capable management – is in our opinion the best way to enter the Italian gaming space. In addition to Italy, we have plans to expand into other countries in Europe and beyond.

What are Empire’s first objectives in Italy?

We want to be a forerunner in this market, for this – after Multigioco – we have ongoing negotiations with another major operator rich in human capital and experience, which is enthusiastic about the idea of having a foreign shareholder and capital sources. We plan to become one of the top five players in the Italian gaming space, always keeping in mind the need to offer a responsible gaming product to the consumer. We know that the most difficult part is yet to come; after the acquisitions, we will need to continue to invest resourcefully to reap the large rewards this market has to offer.

Which brand will you use to manage your business in Italy?

We will have three main areas of action: online web-based gaming; corners and agencies. We believe that we will maintain a specific brand for each sector, but we have not yet made a decision to that end. In any case, it will be clear to the consumer that the location is a part of the Empire Global group of companies. Our stores will be well organized and recognizable even from an aesthetic point of view. We plan to invest aggressively on this part of our business.

Speaking of money, how much is the investment of Empire in the Italian market?

Our forecast is to invest 50 million by the end of 2015, with at target of 100 – 120 physical betting locations as well as the development of our online web based business.

Do you plan to participate in the tender for betting licences in 2016?

Certainly yes, it will be mandatory for us, we will choose the areas in which to implement our existing network carefully.

Are you worried about the presence of thousands of unauthorized operator centers in the market?

Very much. We want to enter the market by following the rules, but we ask that those rules apply equally to all participants. To reassure investors, both the courts and the Italian authorities must ensure that laws are respected, otherwise, it will be increasingly difficult to attract international investors to Italy.

Do you believe that the proposed amnesty for foreign operators will help the market in this sense?

It is not just a matter of paying or not paying taxes, the key is to have an equal playing field for all. There should be no parallel network; all operators – even those that operate in the Italian market thanks to the amnesty proposal – must be transparent.

NEWGIOCO GROUP, INC. (the “Corporation”) AUDIT COMMITTEE CHARTER

NEWGIOCO GROUP, INC.

(the “Corporation”)

AUDIT COMMITTEE CHARTER

 The audit committee is a committee of the board of directors to which the board delegates its responsibilities for the oversight of the accounting and financial reporting process and financial statement audits.

Formation

The Board of Directors of Newgioco Group, Inc., a Delaware corporation (the “Company”), has established the Audit Committee pursuant to Section 141(c)(2) of the Delaware General Corporation Law and Article III, Section 10 of the Company’s Bylaws.

Composition

The Audit Committee (the “Committee”) shall be comprised of not less than three members of the Board of Directors of the Company.  Subject to the foregoing, the exact number of members of the Committee shall be fixed and may be changed from time to time by resolution duly adopted by the Board of Directors.  The Committee members will be appointed by the Board of Directors and may be removed by the Board in its discretion.  Each member shall be independent as defined in the listing standards of the exchange on which the Company’s securities are quoted or listed in effect from time to time (referred to below as the “Listing Standards”) and the Board of Directors shall have affirmatively determined that the member is independent.  As more clearly set forth in the Listing Standards, members must not have any current or past relationships with the Company which would interfere with their exercise of independent judgment or otherwise fail to meet the independent standards set forth in the Listing Standards.  In addition, the members of the Committee also shall satisfy the following requirements:

  • Each member shall be “financially literate” as determined by the Board of Directors. A director shall be considered “financially literate” if by reason of his or her educational, professional or business background, the director is able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and statement of cash flows.
  • At least one member of the Committee must have accounting or related financial management expertise and, to the extent reasonably possible, otherwise satisfy the standards of an “audit committee financial expert” as defined in Regulation S-K Item 401(e) adopted by the Securities and Exchange Commission (the “SEC”).
  • Other than in his or her capacity as a member of the Board of Directors or of a committee thereof, no director who, directly or indirectly, accepts any consulting, advisory, or other compensatory fee from the Company as determined pursuant to SEC Rule 10A-3(b)(1) shall be eligible to serve as a member of the Committee.
  • No director who is an “affiliated person” of the Company as defined by SEC Rule 10A-3(e)(i) shall be eligible to serve as a member of the Committee.

Purpose and responsibilities

The primary purpose of the Committee shall be to: (i) assist the Board of Directors in discharging its responsibilities to oversee the integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the independent auditors qualifications and independence, and the performance of the Company’s internal audit function and independent auditors; (ii) have direct responsibility for the appointment, compensation, retention and oversight of the work of any independent auditors employed by the Company for the purpose of preparing or issuing an audit report or performing other audit, review or attest services; and (iii) produce an audit committee report for inclusion in the Company’s proxy statement.  The Committee’s responsibilities shall include the following:

1. Pre-Approval of Auditor Services

  • All audit services, including the provision of comfort letters in connection with securities offerings, and non-audit services provided to the Company by the Company’s auditors shall be approved in advance by the Committee, except with respect to non-audit, review or attest services if:
    • The aggregate amount of all such non-audit services provided to the Company constitute less than 5% of the total amount of revenues paid by the Company to its auditor during the fiscal year in which the non-audit services are provided;
    • The services were not recognized by the Company at the time of the engagement to be non-audit services; and
    • The services are promptly brought to the attention of the Committee and approved prior to the completion of the audit by the Committee or by one or more members of the Committee to whom authority to grant such approvals has been delegated by the Committee.

If the Committee approves an audit service within the scope of engagement of the independent auditor, the audit service shall be deemed to have been preapproved for purposes of this Article III, A.  The Committee may delegate to one or more of its members the authority to grant pre-approvals.  Any decision by a member to whom such authority has been delegated shall be presented to the Committee at its next meeting.

  • The independent auditor and any person associated with the independent auditor (to the extent determined appropriate by the SEC) shall not provide contemporaneously with the audit, and the Committee shall not approve, any of the following as defined under SEC Reg. S-X, Rule 2-01(c)(4):
    • Bookkeeping or other services related to the accounting records or financial statements of the Company;
    • Financial information systems design and implementation;
    • Appraisal or valuation services, fairness opinions, or contribution-in-kind reports;
    • Actuarial services;
    • Internal audit outsourcing services;
    • Management functions or human resources;
    • Broker or dealer, investment adviser, or investment banking services;
    • Legal services and expert services unrelated to the audit; and
    • Any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible.

2. Oversight of Independent Auditing Services

  • Meet with the independent auditors to review and approve the plan and scope for each audit of the Company’s financial statements and related services, including proposed fees to be incurred with respect thereto.
  • Review and recommend action with respect to the results of each independent audit of the Company’s financial statements, including problems encountered in connection with such audit, difficulties with management’s response and recommendations of the independent auditors arising as a result of such audit.
  • Discuss with the Company’s independent auditors the matters required to be communicated pursuant to Statement on Auditing Standards No. 61 (“SAS 61”), as may be amended or supplemented.
  • At least annually, discuss with the independent auditors their independence and receive each of the following in writing:
    • Disclosure of all relationships between the auditors and their related entities and the Company and its related entities that in the auditors’ professional judgment may reasonably be thought to bear on independence; and
    • Confirmation that, in the auditors’ professional judgment, they are independent of the Company within the meaning of the federal securities laws.
  • The independent auditor’s internal quality-control procedures and any material issues raised by the most recent internal quality-control review, or peer review, of the firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues.
  • Discuss with the Company’s independent auditors any relationships or services disclosed by the independent auditors that may impact the objectivity and independence of the independent auditors and recommend to the Board of Directors any actions in response to the independent auditors’ disclosures to satisfy itself of the independent auditors’
  • Evaluate the performance of the Company’s independent auditors and present its conclusions and any recommendation to the Board of Directors regarding the Company’s independent auditors.
  • Obtain and review the reports of the Public Company Accounting Oversight Board with respect to the Company’s independent auditors when such reports are made publicly available.

3. Financial Statements

  • Resolve any disagreements between management and the independent auditors regarding financial reporting.
  • Receive the report of the independent auditor that performs for the Company any audit required by the Exchange Act with respect to each of the following:
    • All critical accounting policies and practices to be used;
    • All alternative treatments of financial information within Generally Accepted Accounting Principles that have been discussed with management officials of the Company, the ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor; and
    • Other material written communications between the independent auditor and the Company such as any management letter or schedule of unadjusted differences.
  • Review and discuss with the Company’s independent auditors and management the Company’s audited financial statements, including the Company’s disclosures under “Management Discussion and Analysis of Financial Conditions and Results of Operations”.
  • Based on (1) its review and discussions with management of the Company’s audited financial statements; (2) its discussion with the independent auditors of the matters to be communicated pursuant to SAS 61; and (3) the written disclosures from the Company’s independent auditors regarding independence, recommend to the Company’s Board of Directors whether the Company’s audited financial statements should be included in the Company’s Annual Report on Form 10-K for the last fiscal year for filing with the SEC.
  • Review and discuss with the Company’s independent auditors and management the Company’s quarterly financial statements, including the Company’s disclosures under “Management Discussion and Analysis of Financial Condition and Results of Operations”.
  • Review and discuss the Company’s earnings press releases, as well as financial information and earnings guidance provided to analysts and ratings agencies.

4. Internal Controls

  • Review with the Company’s independent auditors and financial management the adequacy and effectiveness of the Company’s system of internal accounting controls, including the adequacy of such controls to expose any payments, transactions or procedures that might be deemed illegal or otherwise improper.
  • Prior to the Company’s filing of any Quarterly Report on Form 10-Q or Annual Report on Form 10-K, receive the following disclosures from the Company’s principal executive officer and principal financial officer with respect to the following:
    • All significant deficiencies in the design or operation of internal controls which could adversely affect the Company’s ability to record, process, summarize and report financial data;
    • All material weaknesses in internal controls identified by such officers to the Company’s independent auditors; and
    • Any fraud, whether material or not material, that involves management of the Company or other employees who have a significant role in the Company’s internal controls.
  • Obtain the attestation and report of the Company’s independent auditors on the assessment made by the Company’s management in the Company’s Annual Report on Form 10-K of the effectiveness of the Company’s internal control structure and procedures for financial reporting.
  • Review the scope and results of the Company’s internal auditing procedures and practices and oversee the effectiveness thereof.

5. Management Conduct Policies

  • Establish procedures for:
    • The receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters; and
    • The confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.
  • Review from time to time the code of ethics for senior financial officers of the Company which includes those standards that the Committee has determined to be reasonably necessary to promote:
  • Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
  • Full, fair, accurate, timely, and understandable disclosure in the periodic reports required to be filed by the Company under the Exchange Act; and
  • Compliance with applicable governmental rules and regula
  • Make interpretations from time to time as to the scope and application of the Company’s senior financial officer conduct policies.
  • Review and approve or disapprove proposed transactions between the Company and its employees (other than employment related transactions) or directors.
  • Receive any report required to be made by the Company’s attorneys pursuant to the standards adopted by the SEC for professional conduct of attorneys appearing and practicing before the SEC.

6. Other Duties

 Meet separately, periodically, with management, with internal auditors and with independent auditors.

  • Discuss policies with respect to risk assessment and risk management.
  • Produce an annual report for inclusion in the proxy statement as the Audit Committee Report.
  • Set clear hiring policies for employees or former employees of the Company’s independent auditors.
  • Make regular reports to the Board and propose any necessary action to the Board.
  • Evaluate its performance as the Audit Committee on an annual basis.
  • At least annually, review the adequacy of this Charter and recommend to the Company’s Board of Directors any changes to this Charter that the Committee deems necessary or desirable.
  • Perform such other specific functions as the Company’s Board of Directors may from time to time direct, and make such investigations and reviews of the Company and its operations as the Chief Executive Officer or the Board of Directors may from time to time request.

Authority and procedures

The Committee shall meet at least four times a year and shall keep regular minutes of its meetings.  The Committee, as it may determine to be appropriate, may meet in separate executive sessions with other directors, the CEO and other Company employees, agents or representatives invited by the Committee.  The Committee’s Chairman shall be designated by the full Board or, if it does not do so, the Committee members shall elect a Chairman by vote of a majority of the full Committee.  The Chairman of the Committee will preside at each meeting of the Committee and, in consultation with the other members of the Committee, shall set the frequency and length of each meeting and the agenda of items to be addressed at each meeting.  The Committee is at all times authorized to have direct, independent access to the Company’s other directors and management.  The Committee shall have the power to hire independent legal, financial or other advisors, as it deems necessary, without consulting or obtaining the approval of any officer of the Company in advance.  Such power shall include, but not be limited to, authorizing such expenditures by the Company as it shall determine necessary for payment to (1) the independent auditor employed by the Company for purposes of rendering or issuing an audit report, and (2) any advisors employed by the Committee.  The Company’s independent auditors shall report directly to the Committee.  The Committee shall have the authority to delegate any of its responsibilities to subcommittees as the Committee may deem appropriate, provided the subcommittee is composed entirely of independent directors and has a published committee charter.

NEWGIOCO GROUP, INC. (the “Corporation”) AUDIT COMMITTEE MANDATE

NEWGIOCO GROUP, INC.

(the “Corporation”)

AUDIT COMMITTEE MANDATE

 The audit committee is a committee of the board of directors to which the board delegates its responsibilities for the oversight of the accounting and financial reporting process and financial statement audits.

Responsibilities

The audit committee will:

1. review and report to the board of directors of the Corporation on the following before they are published:

(i)        the financial statements and MD&A (management discussion and analysis) (as defined in National Instrument 51-102) of the Corporation;

(ii)        the auditor’s report, if any, prepared in relation to those financial statements;

2. review the Corporation’s annual and interim earnings press releases before the Corporation publicly discloses this information;

3. satisfy itself that adequate procedures are in place for the review of the Corporation’s public disclosure of financial information extracted or derived from the Corporation’s financial statements and periodically assess the adequacy of those procedures;

4. recommend to the board of directors:

(i)         the external auditor to be nominated for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the Corporation, and

(ii)       the compensation of the external auditor;

5. oversee the work of the external auditor engaged for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the Corporation, including the resolution of disagreements between management and the external auditor regarding financial reporting;

6. monitor, evaluate and report to the board of directors on the integrity of the financial reporting process and the system of internal controls that management and the board of directors have established;

7. monitor the management of the principal risks that could impact the financial reporting of the Corporation;

8. establish procedures for:

(i)         the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls, or auditing matters, and

(ii)       the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters;

9. pre-approve all non-audit services to be provided to the Corporation or its subsidiary entities by the Corporation’s external auditor;

10. review and approve the Corporation’s hiring policies regarding partners, employees and former partners and employees of the present and former external auditor of the Corporation;

11. with respect to ensuring the integrity of disclosure controls and internal controls over financial reporting, understand the process utilized by the Chief Executive Officer and Chief Financial Officer to comply with Multilateral Instrument 52-109; and

12. the committee shall annually review, discuss and assess the performance of the committee and its members, and shall periodically review and consider the need for recommending amendment to this charter to the board of directors.

Composition of the Committee

The committee will be composed of three directors from the Corporation’s board of directors, a majority of whom will be independent.  Independence of the Board members will be as defined by applicable legislation and as a minimum each committee member will have no direct or indirect relationship with the Corporation which, in the view of the board of directors, could reasonably interfere with the exercise of a member’s independent judgment.  All members of the committee will be financially literate as defined by applicable legislation.

Meetings

Meetings may be convened at the request of any member of the audit committee or at the request of the Corporation’s external auditor.  The committee shall meet regularly, but not less frequently than quarterly.

A majority of the members of the committee shall constitute a quorum.  The committee shall act on the affirmative vote of a majority of the members present at a meeting at which a quorum is present.  Without a meeting, the committee may act by unanimous written resolution of all members.

The committee members shall, when deemed appropriate, meet in private session with the external auditor; with management and as committee members only to discuss matters relevant to the committee’s mandate.

Authority

The committee has the authority to communicate directly with and to meet with the external auditors and the internal auditor, without management involvement. This extends to requiring the external auditor to report directly to the committee.

The committee has the authority to engage independent counsel and other advisors as it deems necessary to carry out its duties and the committee will set the compensation for such advisors.

Reporting

The reporting obligations of the committee will include:

1. reporting to the board of directors on the proceedings of each committee meeting and on the committee’s recommendations at the next regularly scheduled directors’ meeting; and

2. reviewing, and reporting to the board of directors on its concurrence with, the disclosure required with respect to the audit committee in any management information circular prepared by the Corporation.

NEWGIOCO GROUP, INC. (the “Corporation”) BOARD MANDATE

NEWGIOCO GROUP, INC.

(the “Corporation”)

BOARD MANDATE

 Board Mandate

  1. The Corporation’s Board of Directors are stewards of the organization. As such they have the responsibility to oversee the conduct of the business, provide direction to management and ensure all major and strategic issues affecting the business and affairs of the Corporation are given proper consideration.

With the assistance of senior management, who report on the risks of the Corporation’s business, the Board considers, and has input into, the assessment and management of those risks on a regular basis.

The Board takes responsibility for appointing the President & Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), is consulted on the appointment of other senior officers and is responsible for the consideration of succession issues. The Board satisfies itself as to the integrity of the CEO, with a view to creating a culture of integrity throughout the Corporation. The Board, through the Compensation Committee, formally reviews the CEO’s remuneration and performance. Senior management participates in appropriate professional and personal development activities, courses and programs on a self directed basis and the Board supports management’s commitment to training and development of all employees.

The Board has primary responsibility for the determination of all matters of strategy relating to the present business and future business of the Corporation and is responsible for ensuring that all strategic decisions are the subject of appropriate consideration.

The Board requires accurate, timely and effective communication to shareholders, and is responsible for adopting a policy for communicating with shareholders and the investment community. Regular news releases are made at least quarterly which report quarterly and annual financial results. Supplemental releases are made highlighting material facts and updating investor’s regarding the Corporation’s activities. The Board, in conjunction with its Audit Committee, assesses the integrity of the Corporation’s internal controls.

Specific Duties of the Board

  1. Among its specific duties, the Board:

(a)        selects, evaluates, sets the compensation for and, if necessary, replaces the CEO;

(b)        provides advice and counsel to the CEO, nominates Directors and evaluates Board performance;

(c)        holds formal strategic planning sessions and approves strategic plans and objectives, major decisions and corporate plans on at least an annual basis;

(d)       oversees the ethical, legal and social conduct of the Corporation;

(e)        regularly reviews the Corporation’s financial performance and condition;

(f)        identifies and considers risks in the Corporation’s operations and establishes policies for monitoring and managing risks;

(g)        oversees succession planning for senior management;

(h)        represents the interests of all shareholders and not specific groups; and

(i)         develops the Corporation’s approach to corporate governance with the assistance of the Corporate Governance & Nominating Committee.

New directors will be provided with an orientation and a directors’ manual containing information about the Corporation’s governance practices and the business of the Corporation.  The Board is permitted to engage outside consultants as deemed appropriate by the directors. The Board shall meet at least four times per year, and requires board materials in advance of meetings.

NEWGIOCO GROUP, INC. (the “Corporation”) BUSINESS PRACTICES Corporate Social Responsibility

NEWGIOCO GROUP, INC.

(the “Corporation”)

BUSINESS PRACTICES

Corporate Social Responsibility

Newgioco Group, Inc. is committed to being a good corporate citizen in each and every country in which we operate. We are committed to the principle of sustainable development, striving to minimize our environmental footprint, while simultaneously strengthening the economic and social well being of the communities where we operate.

We conduct our business in accordance with applicable laws and regulations.  Every Newgioco Group, Inc. employee, contractor and consultant engaged in any of our operations worldwide must comply with the laws and regulations of the country where they are involved.  However, we recognize that legal compliance is a minimum, and not our entire ethical and social responsibility.

We will operate in a manner consistent with recognized global industry standards and try to exceed them as economic and operational constraints permit.

Our Commitments To Our Stakeholders

Shareholders

We strive to maximize value for our shareholders and to meet the expectations we communicate. We consider that maintaining the trust of our shareholders is a crucial component to our success.  In order to maintain that trust, our decisions will take into account not only economic, but also human, social and environmental considerations that are applicable to our business.  We disclose relevant and reliable information to our shareholders, subject to legal requirements and competitive constraints.

Employees

Newgioco Group, Inc. strives to be an employer of choice in all of its global operations. We are committed to act in a manner consistent with internationally recognized labour standards in our areas of operation.  We are committed to non-discrimination in employment and we will not engage in or tolerate discrimination in our workplace.  We all share the responsibility for creating an atmosphere of fairness, integrity and respect towards others.

Local communities

We seek to develop enduring and mutually beneficial relationships with the communities in which we operate and to contribute to their economic and social development. We engage in consultation with local communities, interest groups, and local governments in order that significant issues arising from our operations are identified and effectively addressed.  We strive to provide meaningful employment opportunities for people from the local community.

Outside working hours, our employees are encouraged to participate in charitable, educational, community and civic activities and projects that enhance the quality of community life, as long as these activities do not interfere with their ability to do their job or present any other kind of conflict.

Newgioco Group, Inc. supports and respects the protection of internationally recognized human rights in our areas of operation, and will not take part in human rights abuses.

Government and Customers

Newgioco Group, Inc. interacts with government and regulatory agencies in an honest and cooperative manner. We seek to establish long term relationships and effective communications with the governments of countries where we operate.

We are attentive to our customers’ needs, treat them fairly and provide them with quality products and services.

Suppliers, contractors, consultants and industry partners

Suppliers, contractors, consultants, and industry partners contribute to our success.  We deal with them fairly, and treat them with integrity and respect.

We expect our suppliers, contractors and consultants to conduct their business with Newgioco Group, Inc. in accordance with applicable laws and regulations.  We also expect them to act consistently with the principles outlined in this Code and key Newgioco Group, Inc. policies, such as those related to business ethics, environment, health and safety, and workplace practices.  Newgioco Group, Inc. also requires that its contracted operators act according to principles compatible with those of this Code when conducting operations for Newgioco Group, Inc.

Competitors

We seek to compete fairly and honestly.  We will only acquire information about our competitors by legal and ethical means.  Newgioco Group, Inc. co-operates with and contributes to the development of our industry by participating in related industry associations.

Bribery, corruption and gifts

We conduct our business in an open, honest and above-board manner, and do not seek to exercise improper influence on suppliers, customers, government officials, prospective employees or any other person doing business or wishing to do business with Newgioco Group, Inc.  We want to prevent even the appearance of such influence.

We do not solicit or pay bribes, for any purpose, including obtaining or retaining business.  We also avoid being placed in situations where our own judgement might be influenced or appears to be influenced by improper considerations. We also do not pay or accept any “kickbacks” from a contractor.

Newgioco Group, Inc. complies with to the Corruption of Foreign Public Officials Act (Canada), the Foreign Corrupt Practices Act (USA) and equivalent legislation in other countries.

We do not accept or give gifts, favours, personal advantages, services payments, loans, or benefits of any kind, other than those of nominal value that can be made as a generally accepted business practice.

NEWGIOCO GROUP, INC. (the “Corporation”) CHAIRMAN OF THE BOARD POSITION DESCRIPTION

NEWGIOCO GROUP, INC.

(the “Corporation”)

CHAIRMAN OF THE BOARD POSITION DESCRIPTION

Appointment

1. The Chairman of the Board will be appointed, serve and be removed at the pleasure of the Board.

Duties of the Chairman of the Board

2. In addition to fulfilling his or her duties as an individual director, the duties of the Chairman of the Board are to:

(a)        serve as the Board’s role model for responsible, ethical and effective decision making;

(b)       provide leadership to the Board;

(c)        manage the affairs of the Board to ensure that the Board is organized properly and functions effectively;

(d)       take reasonable steps to ensure that the members of Board execute their duties pursuant to their Mandate;

(e)        preside at, call and schedule each meeting of the Board;

(f)        preside at meetings of the shareholders and ensure that shareholder materials are distributed;

(g)       coordinate with management to ensure that:

(i) documents are delivered to directors in sufficient time in advance of Board meetings for a thorough review;

(ii) matters are properly presented for the Board’s consideration at meetings;

(iii) the Board has an appropriate opportunity to discuss issues at each meeting; and

(iv) the Board has an appropriate opportunity to question executive officers, management, employees, external auditors, experts and advisors regarding any and all matters of importance to the Board and the Corporation;

(h)       communicate with each Board member to ensure that:

(i) each director has the opportunity to be heard and participate in decision making; and

(ii) each director is accountable to the Board and to each Committee on which he or she serves.

(i)        arrange for the preparation, accuracy and distribution of all minutes of the Board;

(j)        ensure that each Committee of the Board, following their meetings:

(i) reports to the Board regarding their activities, findings and recommendations; and

(ii) makes Committee information available to any director upon request; and

(k)       assist in maintaining effective working relationships between Board members, external auditors, experts, advisors, executive officers and management.

NEWGIOCO GROUP, INC. (the “Corporation”) CODE OF BUSINESS CONDUCT AND ETHICS

NEWGIOCO GROUP, INC.

(the “Corporation”)

CODE OF BUSINESS CONDUCT AND ETHICS

(WITH WHISTLEBLOWER POLICY)

Purpose

This Code of Business Conduct and Ethics (this “Code”) provides a general statement of the Company’s expectations regarding the ethical standards that each director, officer and employee should adhere to while acting on behalf of the Company. Each director, officer, employee and consultant is expected to read and become familiar with the ethical standards described in this Code and may be required, from time to time, to affirm his or her agreement to adhere to such standards.  Through this Code, we endorse the following principles:

  • honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
  • full, fair, accurate, timely and understandable disclosure in the Company’s shareholder reports and in other public communications and filings of the Company;
  • compliance with applicable governmental laws, rules and regulations; and
  • accountability by all of our directors, officers and employees for adherence to this Code.

This Code outlines the broad principles of legal and ethical business conduct embraced by our Company. It is a not a complete list of legal or ethical questions a director, officer or employee might face in the course of business, and therefore this Code must be applied using common sense and good judgment. Compliance with the spirit as well as the letter of this Code is very important to us.

Administration

The Company’s Board of Directors is responsible for setting the standards of business conduct contained in this Code and updating these standards as it deems appropriate to reflect changes in the legal and regulatory framework applicable to the Company, the business practices within the Company’s industry, the Company’s own business practices, and the prevailing ethical standards of the communities in which the Company operates. While the Company’s Chief Executive Officer and Chief Financial Officer will oversee the procedures designed to implement this Code to ensure that they are operating effectively, it is the individual responsibility of each director, officer and employee of the Company to comply with this Code. Those who violate this Code will be subject to disciplinary action.

Compliance with laws, rules and regulations

Obeying the law, both in letter and in spirit, is the foundation on which the Company’s ethical standards are built. All directors, officers, employees and consultants must respect and obey the laws and governmental rules and regulations of the countries, provinces, states, cities and local communities in which we operate. Although we do not expect that all directors, officers and employees will know and understand the details of all of these applicable laws and regulations, we do expect that everyone will know enough to determine when to seek advice from supervisors, managers or other appropriate personnel.

The Company is engaged in a variety of business relationships with other companies, individuals, organizations and levels of government in many countries. In all interactions, the Company employees, officers, directors and consultants are required to act ethically, honestly and with integrity and to comply with all laws, rules and regulations governing their activities. In dealings with others, Company employees, officers, directors and consultants must avoid even the perception that favorable treatment is sought in exchange for furnishing or receiving business courtesies. Business courtesies (gifts and entertainment) are designed to build understanding and goodwill in business relationships and may play an important role in some cultures; however, Company personnel are always required to exercise good judgment in extending business courtesies and never accept or pay bribes, favors or “kickbacks” for the purpose of securing business transactions. All payments must be necessary and lawful in the host country as well as Canada and the United States.

Conflicts of interest; corporate opportunities

The Company requires that its directors, officers, employees and consultants, as well as its other agents and representatives, avoid any activity which creates or gives the appearance of a conflict of interest between their personal interests and the Company’s interests. A conflict of interest generally exists when a person has a direct or indirect personal interest in a transaction or situation that affects or appears to affect his or her judgment and/or divides his or her loyalties between two or more competing interests. A conflict can arise when someone takes action or has an interest that makes it difficult to perform his or her duties on behalf of the Company, objectively and effectively. The Company recognizes that “outside” directors may sit on other boards, including boards of lottery and gaming companies, and are involved in other businesses that may include or be related to the lottery and gaming industry. Those outside directors should ensure that they disclose any conflicts as required under corporate law and not take for themselves (or other companies with whom they have a relationship) opportunities that are discovered through the use of the Company’s property, information or position. No director that is not an outside director and no officer or employee shall:

  • be a consultant to, or a director, officer or employee of, or otherwise operate an outside business that markets products or services in competition with the Company’s current or potential products and services;
  • have any financial interest, including shares ownership, in any such outside business that might create or give the appearance of a conflict of interest;
  • seek or accept any personal loan or services from any such outside business, except from financial institutions or service providers offering similar loans or services to third parties under similar terms in the ordinary course of their respective businesses;
  • be a consultant to, or a director, officer or employee of, or otherwise operate an outside business if the demands of the outside business would interfere with the director’s, officer’s or employee’s responsibilities with the Company;
  • accept any personal loan or guarantee of obligations from the Company, except to the extent such arrangements are legally permissible;
  • conduct business on behalf of the Company with immediate family members, which include spouses, children, parents, siblings and persons sharing the same home whether or not legal relatives; or
  • taking for themselves opportunities that are discovered through the use of the Company’s property, information or position.

The appearance of a conflict of interest may exist if an immediate family member of a director, officer or employee of the Company is a consultant to, or a director, officer or employee of, or has a significant financial interest in, a competitor, supplier or customer of the Company, or otherwise does business with the Company.

Directors and officers shall notify the Chairman of the Company’s Audit Committee and employees and consultants who are not directors or officers shall notify the Chief Financial Officer of the existence of any actual or potential conflict of interest.

Insider trading

Directors, officers and employees are expected to fully comply with securities laws of the United States of America with respect to the disclosure of “material” corporate information and with respect to “insider” trading in the Company’s securities. These laws provide for substantial civil and criminal penalties for individuals who fail to comply. Information that reasonably can be expected to affect the market value of a company’s shares or to influence an investor’s decisions regarding securities transactions is considered “material.” Such information may include financial and key business data; merger, acquisition or divestiture discussions; award or cancellation of a major contract; forecasts of future results; significant litigation; and/or gain or loss of a significant customer or supplier.

Insiders are prohibited from transacting in the Company’s shares with knowledge of material information that has not been disclosed to the public. For purposes of these restrictions, an “insider” includes not only directors, officers, employees and consultants of the Company, but also anyone else with non-public material information about the Company. You may be deemed to have violated these laws even if you innocently pass on non-public information about the Company to a friend or family member who then acts on such information and buys or sells the Company’s shares. To avoid inadvertent disclosure of non-public material information, directors, officers, employees and consultants should not discuss such information with or in the presence of any unauthorized persons, including family members and friends.

Confidentiality; protection and proper use of the company’s Assets

Directors, officers, employees and consultants shall maintain the confidentiality of all information entrusted to them by the Company or its suppliers, customers or other business partners, except when disclosure is authorized by the Company or legally required. Confidential information includes (1) information marked “Confidential,” “Private,” “For Internal Use Only,” or similar legends, (2) technical or scientific information relating to current and future products, services or research, (3) business or marketing plans or projections, (4) earnings and other internal financial data, (5) personnel information, (6) supply and customer lists and (7) other non-public information that, if disclosed, might be of use to the Company’s competitors, or harmful to the Company or its suppliers, customers or other business partners. Confidential information also includes information that our customers and suppliers have entrusted to us. To avoid inadvertent disclosure of confidential information, directors, officers and employees shall not discuss confidential information with or in the presence of any unauthorized persons, including family members and friends.

The obligation to preserve confidential information continues even after your employment or other relationship with the Company ends.

This Code is not intended to modify any separate confidentiality agreement to which a director, officer, employee or consultant may be subject.

Proper use of all of the Company’s property, information resources (including internet, email, and intranet) and communications systems is the responsibility of all employees. Our physical assets are intended for conducting company business. All electronic and telephonic communication products, intranet and internet servers or any other systems owned, licensed or operated by the Company are considered the Company’s business records, and therefore, Company property and should be used in accordance with Company corporate policy.

The information, ideas, concepts and know-how described, documented or contained in the Company’s electronic communications systems and related databases are the intellectual property of the Company. The copying or use of the Company’s intellectual property for personal use or benefit during or after employment with the Company is prohibited.

Proprietary information including intellectual property, and company private or confidential information is extremely valuable and must not be disclosed to anyone without proper authorization.

Fair dealing

The Company is committed to promoting the values of honesty, integrity and fairness in the conduct of its business and sustaining a work environment that fosters mutual respect, openness and individual integrity. Directors, officers and employees are expected to deal honestly and fairly with the Company’s customers, suppliers, competitors and other third parties, including governmental agencies. To this end, directors, officers and employees shall not:

  • make false or misleading statements to customers, suppliers or other third parties;
  • make false or misleading statements about competitors;
  • solicit or accept from any person that does business with the Company, or offer to extend to any such person:
    1. cash of any amount; or
    2. gifts, gratuities, meals or entertainment that could influence or reasonably give the appearance in influencing the Company’s business relationship with that person or go beyond common courtesies usually associated with accepted business practice;
  • solicit or accept any fee, commission or other compensation for referring customers to third-party vendors; or
  • otherwise take unfair advantage of the Company’s customers or suppliers, or other third parties, through manipulation, concealment, abuse of privileged information or any other unfair-dealing practice.

Discrimination and harassment

The Company is committed to providing equal employment opportunity in employment and will not tolerate any illegal discrimination or harassment. Improper conduct, such as derogatory comments based on racial or ethnic characteristics or religious preferences and unwanted sexual advances, will not be tolerated.

Health and safety

The Company strives to provide each of its employees with a safe and healthy workplace. Each employee has responsibility for maintaining a safe and healthy workplace for other employees by following health and safety rules and practices instituted by the Company and by reporting accidents, injuries and unsafe equipment, practices or conditions.

Violence and threatening behavior are not permitted. Employees should report to work in condition to perform their duties, free from the influence of illegal drugs or alcohol. The use of illegal drugs or alcohol in the workplace will not be tolerated.

Record keeping

The Company requires honest and accurate recording and reporting of information in order to make responsible business decisions. All of the Company’s books, records, accounts and financial statements must be maintained in reasonable detail and must conform both to applicable legal requirements and to the Company’s system of internal controls.  Business records and communications often become public, and we should avoid exaggeration, derogatory remarks and other inappropriate statements about people and other companies.  This applies to e-mail, internal memos and formal reports. Records should always be retained or destroyed in accordance with the Company’s record retention policies. No person shall knowingly alter, destroy or make a false entry in any record with the intent to obstruct a government investigation or bankruptcy case. Directors, officers, employees or consultants may report any concerns regarding questionable accounting and auditing matters confidentially and anonymously to the Chief Financial Officer or any member of the Audit Committee.

Accurate and timely periodic reports

The Company is committed to providing investors with full, fair, accurate, timely and understandable disclosure in the periodic reports that it is required to file. To this end, the Company shall:

  • comply with generally accepted accounting principles at all times;
  • maintain a system of internal accounting controls that will provide reasonable assurances to management that all transactions are properly recorded;
  • maintain books and records that accurately and fairly reflect the Company’s transactions;
  • prohibit the establishment of any undisclosed or unrecorded funds or assets;
  • maintain a system of internal controls that will provide reasonable assurances to management that material information about the Company is made known to management, particularly during the periods in which the Company’s shareholder reports are being prepared; and
  • present information in a clear and orderly manner and avoid the use of legal and financial jargon in the Company’s periodic reports.

Political contributions

No Company assets, including employees’ work time, use of the Company’s facilities or equipment or direct monetary payment, may be contributed to any political candidate, party, political action committee or ballot measure without the permission of the Company’s Board of Directors. This does not preclude individuals from participating in any political activities of their choice on an individual basis, with their own money and on their own time.

Reporting and effect of violations

General Policy

Directors officers and employees are encouraged to report any conduct which they believe in good faith to be violation or apparent violation of this Code. If you believe a violation has occurred, please contact the Company’s legal counsel.

The Company will not allow any retaliation against a director, officer, employee or consultant who acts in good faith in reporting any such violation.

Complaint Procedure

Notification of Complaint

Company personnel who observe, learn of or, in good faith, suspect a violation of the Code must promptly report the violation or discuss issues and concerns of the type covered by this Code with his or her immediate manager, who in turn is responsible for informing the legal counsel of any violations or concerns raised. If an employee prefers not to report the matter to his or her own manager, the employee may instead report the matter directly to the Chief Financial Officer.

Company personnel who have concerns such as accounting discrepancies, fraud, accounting misrepresentations, auditing matters, accounting omissions, ethics violations or any other financially related concerns should report the matter directly to the Chief Financial Officer at the above address or to the Chair of the Audit Committee.

Whenever practical, the complaint should be made in writing. It is unacceptable to submit a complaint knowing it is false.

Investigation

Reports of violations will be investigated under the supervision of the Chair of the Audit Committee in consultation with external counsel, if applicable or desired. Company personnel are expected to cooperate in the investigation of reported violations.

Confidentiality

Except as may be required by law or the requirements of the resulting investigation, the Chief Financial Officer and others conducting the investigation shall not disclose the identity of anyone who reports a suspected violation if anonymity is requested.

Protection Against Retaliation

Retaliation in any form against an individual who reports an alleged violation of this Code, even if the report is mistaken, may itself be a violation of law and is a serious violation of this Code.  Any alleged act of retaliation must be reported immediately. If determined to have in fact occurred, any act of retaliation may result in appropriate disciplinary action, which may include termination of employment. A copy of the Company’s Whistleblower Protection Policy is attached hereto as Schedule “A” and incorporated herein by reference.

Waivers

The provisions of this Code may be waived for directors or executive officers only by a resolution of the Company’s independent directors. The provisions of this Code may be waived for employees or consultants who are not directors or executive officers by the Company’s Chief Executive Officer provided that written notice of any such waiver is delivered forthwith to the Board of Directors.  Any waiver of this Code granted to a director or executive officer will be publicly disclosed as required by the securities exchange on which the Company’s securities are listed for trading.

SCHEDULE “A”

Whistleblower Protection Policy

Statement of Policy

Officers, directors, employees, contractors, subcontractors, and agents of the Company are prohibited from taking any adverse or harmful action, threatening, harassing, discharging, demoting, suspending or otherwise discriminating against any employee of the Company for any lawful act done by the employee in:

  • providing information to, or otherwise assisting in an investigation, inquiry or otherwise conducted by a:
    1. regulatory or law enforcement agency;
    2. person with supervisory authority over the employee; or
    3. person authorized by the Company to investigate, discover, or terminate misconduct, in each case when the information or investigation concerns conduct that the employee reasonably believes constitutes a violation of:
      • any rule or regulation of any securities regulatory authority; or
      • any provision of provincial, federal, state or foreign law relating to fraud against Company shareholders; or
      • any provincial, federal, state or foreign criminal law provision prohibiting fraud by any means; or
      • the Company’s Code of Conduct; or
      • any Company policy as they may be amended from time to time; or
  • filing, testifying, or participating in any legal proceeding relating to an alleged violation of the laws described above; or
  • providing to a law enforcement officer any truthful information relating to the commission or possible commission of a provincial, federal, state or foreign offence.

Compliance Procedure

The Company strongly encourages the prompt reporting of any violations of this Policy. Any employee who observes, learns of or, in good faith, suspects a violation of this Policy is strongly encouraged to promptly report the violation to his or her immediate manager, who in turn is responsible for informing the Chief Financial Officer of any violations or concerns raised. If an employee prefers not to report the matter to his or her own manager, the employee may instead report the matter directly to the Chief Financial Officer

Reports of violations or alleged violations of this Policy will be treated confidentially, to the extent possible, and investigated thoroughly. To the extent that a violation of this Policy is found, the Company will take appropriate remedial action, if possible.

The Company will not retaliate against an employee for bringing to the Company’s attention a good-faith report of a possible violation of this Policy.

Consequences of Policy Violations

Any officer, director, employee, consultant, contractor, subcontractor, or agent of the Company who is found to have violated this Policy will be subject to disciplinary action, which may include termination of employment or association. Violations of this Policy by a contractor, subcontractor, or agent will be reported to the management of that entity for possible disciplinary action. Persons who engage in conduct that violates this Policy may also be subject to civil liability and criminal penalties.

Amendments to this Policy

The Board of Directors may amend this Policy from time to time as necessary or appropriate.

Adopted:

Affirmation of the Code

I [Name] confirm that, my dealings or transactions on behalf of the Company:

  1. will be characterized by honesty and integrity and I have no actual or apparent conflicts of interest between my professional relationships;
  2. will comply with all applicable laws, rules and regulations;
  3. will not involve any unethical dealings, unbooked fees, special favors, benefits or contributions to any private party, government or government agency;
  4. will not involve any lawful arrangements with competitors; and
  5. will be recorded and properly described on the Company’s books.

I [Name] acknowledge my accountability for adherence to this Code. I also acknowledge that my compliance, with this Code is a condition of my employment and that if I fail to comply with this Code or applicable laws, rules or regulations, I may be subject to disciplinary measures, termination of employment for just cause, and legal proceedings. The Company will disclose any changes in this Code as it concerns my activities in its disclosure documents and shall post a facsimile of this document and any waiver that it may have provided me, on the Company’s website.

_____________________________

Date

_____________________________

Signature

_____________________________

Witness

Approved by the Board of Directors

NEWGIOCO GROUP, INC. (the “Corporation”) COMPENSATION COMMITTEE CHAIR POSITION DESCRIPTION

NEWGIOCO GROUP, INC.

(the “Corporation”)

COMPENSATION COMMITTEE CHAIR POSITION DESCRIPTION

 Appointment

  1. The Chair of the Compensation Committee (the “Committee”) will be appointed, serve and be removed at the pleasure of the Board.

 Duties of the Committee Chair

  1. In addition to fulfilling his or her duties as an individual director, the duties of the Chair are to:

(a) serve as the Committee’s role model for responsible, ethical and effective decision making;

(b) lead the Committee in discharging all duties set out in the Committee Charter and as are delegated to the authority of the Committee by the Board;

(c) take reasonable steps to ensure that the Committee members execute their duties pursuant to the Committee Charter;

(d) manage the affairs of the Committee to ensure that the Committee is organized properly and functions effectively;

(e) preside at, and together with the members as appropriate, call, schedule and prepare the agenda for each meeting of the Committee;

(f) coordinate with management and advisors engaged by the Committee to ensure that:

(i) documents are delivered to members in sufficient time in advance of Committee meetings for a thorough review;

(ii) matters are properly presented for the Committee’s consideration at meetings;

(iii) members have an appropriate opportunity to discuss issues at each meeting;

(iv) members have an appropriate opportunity to question management, employees and advisors regarding compensation issues and all other matters of importance to the Committee; and

(v) members work constructively towards their recommendations to the Board;

(g) communicate with each member of the Committee to ensure that:

(i) each member has the opportunity to be heard and participate in decision making; and

(ii) each member is accountable to the Committee;

(h) arrange for the preparation, accuracy and distribution of all minutes of the Committee to its members and advisors, as appropriate;

(i) ensure that the Committee, following each meeting:

(i) reports to the Board regarding its activities, findings and recommendations; and

(ii) makes Committee information available to any director upon request; and

(j) assist in maintaining effective working relationships between Committee members, the Board, the President & CEO, advisors, executive officers and management.

NEWGIOCO GROUP, INC. (the “Corporation”) COMPENSATION COMMITTEE CHARTER

NEWGIOCO GROUP, INC.

(the “Corporation”)

COMPENSATION COMMITTEE CHARTER

The Board of Directors Newgioco Group, Inc. (the “Company”) hereby adopts this Charter to govern the composition of its Compensation Committee (the “Committee’’) and the scope of the Committee’s duties and responsibilities, and to set forth specific actions the Board of Directors expects the Committee to undertake to fulfill those duties and responsibilities.

Formation

The Board of Directors of Newgioco Group, Inc., a Delaware corporation (the “Company”), has established the Compensation Committee pursuant to Section 141(c)(2) of the Delaware General Corporation Law and Article III, Section 10 of the Company’s Bylaws.

Statement of Purpose

The purpose of the Committee is to approve the policies and oversee the practices of the Company with respect to the compensation made available to the Company’s management so as to enable the Company to attract and retain high quality leadership in a manner consistent with the stated compensation strategy of the Company, internal equity considerations, competitive practice, and the requirements of appropriate regulatory bodies and to communicate to shareholders the Company’s compensation policies and the reasoning behind such policies as required by the exchange on which the Company’s securities are quoted or listed.

Composition of the Compensation Committee

The Compensation Committee (the “Committee”) shall be comprised of not less than two members of the Board of Directors of the Company. Subject to the foregoing, the exact number of members of the Compensation Committee shall be fixed and may be changed from time by resolution duly adopted by the Board of Directors. The Committee members will be appointed by the Board of Directors and may be removed by the Board in its discretion. Each member shall be independent as defined in the listing standards of the New York Stock Exchange in effect from time to time (referred to below as the “Listing Standards”) and the Board of Directors shall have affirmatively determined that the member is independent. As more clearly set forth in the Listing Standards, members must not have any current or past relationships with the Company which would interfere with their exercise of independent judgment or otherwise fail to meet the independent standards set forth in the Listing Standards. The Board of Directors may from time to time constitute a subcommittee of the Compensation Committee comprised of not less than two members of the Committee who satisfy all requirements necessary from time to time to be “non-employee directors” under Section 16b-3 of the Securities Exchange Act of 1934 and “outside directors” under Section 162(m) of the Internal Revenue Code and related regulations, all as amended from time to time. The Board of Directors may disband or suspend the activity of such subcommittee at such times when all members of the Compensation Committee qualify as “non-employee directors” and “outside directors.”

Meetings

The Committee shall meet at least once annually, or more frequently as the Committee may from time to time determine to be appropriate. Unless the Board has previously designated a Chair, the members of the Committee may designate a Chair by majority vote. A majority of the Committee members shall constitute a quorum.

Teleconferences may also be held at such other times as shall be reasonably requested by the Chairman of the Board or the Chairman of the Committee.

The Chair shall prepare the agenda for Committee meetings, after consultation with the Chairman of the Board and Chief Executive Officer and subject to the right of the Committee members to suggest additional items for the agenda.  Agendas are shared with Committee members in advance of meetings. As a general rule, subject to appropriate procedures to protect the confidentiality of particularly sensitive information, appropriate background and explanatory materials concerning matters to be discussed at Committee meetings shall be sent to Committee members in advance.

At the invitation of the Chair meetings may also be attended by other members of management and other persons as are appropriate to matters under consideration, At least once each year, the Committee will meet outside the presence of any employees of the Company, including any employee Directors.  Compensation of the Chief Executive Officer shall be determined by the Committee meeting in executive session.

The Committee and its members have complete access to management, recognizing that it is expected that members will use judgment to be sure that this access is not distracting to the business operations of the Company.  The Committee may engage the services of outside advisors (including experts in the field of executive compensation) if it shall determine such services to be necessary or appropriate for the proper discharge of its duties.  Should any member of the Committee believe that participation of management or outside advisors in discussion of a particular subject would be advisable, they are encouraged to make that request.

The Chair will present an oral report of Committee meetings and other proceedings at each Board meeting. Proposals which require Board action will normally be submitted by the Committee to the Board in writing.

Duties and responsibilities of the Compensation Committee

The duties and responsibilities of the Committee shall include the following:

  1. Compensation Strategy and Policies. Review from time to time and approve the Company’s stated compensation strategy so that management is rewarded appropriately for its contributions to Company growth and profitability and that the executive compensation strategy supports organization objectives and shareholder interests.  Review management’s recommendations and advise management on broad compensation policies such as salary ranges, deferred compensation, incentive programs and executive stock plans.
  2. CEO Evaluation and Compensation. Evaluate annually the Chief Executive Officer, including a discussion of such evaluation with the outside members of the Board.  The evaluation should include an assessment based on both subjective and objective criteria including performance of the business, accomplishment of long-term strategic objectives, development of management, etc.  The evaluation will be communicated to the Chief Executive Officer by the Chair of the Committee, and will be used by the Committee in the course of its deliberations when considering the compensation of the Chief Executive Officer.

Review annually and determine the individual elements of total compensation for the Chief Executive Officer and the goals applicable thereto, and communicate in the annual Board Compensation Committee Report to shareholders the factors and criteria on which the Chief Executive Officers compensation for the last year was based, including the relationship of the Company’s performance to the Chief Executive Officer’s compensation.

  1. Senior Management Compensation. Review and approve the individual elements of total compensation for the senior management of the Company other than the Chief Executive Officer and communicate in the annual Board Compensation Committee Report to shareholders the specific relationship of the Company’s performance to executive compensation.
  2. Directors’ Compensation. Review annually and make recommendations to the Board regarding directors’ compensation.
  3. Incentive Plans. Oversee the administration of the Company’s incentive plans with respect to consistency with the Company’s compensation strategy as to participation, target annual awards, corporate financial goals, and actual awards paid to senior management.
  4. Bonus and Option Plans. As appropriate, consider, establish any goals for, and approve the grant of awards under the Company’s bonus, option or other incentive plans to the Chief Executive Officer and, in consultation with the Chief Executive Officer, to other members of management.
  5. New Plans and Amendments. Approve, subject, where appropriate, to submission to the full Board and the shareholders, new, or amendments to current, compensation and incentive plans for senior management.
  6. Succession Planning. The Chair of the Committee should establish a mechanism with the Chief Executive Officer so that, on a continuing basis, the Chief Executive Officer’s recommendation of a successor should he/she be unexpectedly disabled can be made available to the Board.
  7. Committee Performance. Review annually, the Committee’s performance and determine whether improvements can be made.
  8. Consultants. The Committee may, at its discretion, engage outside compensation consultants to advise regarding compensation matters.
  9. General. Perform such other functions which from time to time may be assigned by the Board of Directors or specifically required of the Committee by the provisions of any compensation or benefit plan maintained by the Company.

NEWGIOCO GROUP, INC. (the “Corporation”) DISCLOSURE POLICY Objective and Scope

NEWGIOCO GROUP, INC.

(the “Corporation”)

DISCLOSURE POLICY

Objective and Scope

The objective of this disclosure policy is to ensure that communications to the investing public about the Corporation are:

(a)        timely, factual and accurate; and

(b)        broadly disseminated in accordance with all applicable legal and regulatory requirements.

This disclosure policy confirms in writing our existing disclosure policies and practices. Its goal is to raise awareness of the Corporation’s approach to disclosure among the board of directors, senior management, employees and consultants.

This disclosure policy extends to all employees, consultants and the board of directors of the Corporation and its subsidiaries and those individuals authorized to speak on behalf of the Corporation or its subsidiaries (collectively referred to as the “Policy Participants”). It covers disclosure in documents filed with the securities regulators and written statements made in the Corporation’s annual and quarterly reports, news releases, letters to shareholders, presentations by senior management and information contained on the Corporation’s web site and other electronic communications. It extends to oral statements made in meetings and telephone conversations with analysts and investors, interviews with the media as well as speeches, press conferences and conference calls.

If you have any questions regarding the contents of this disclosure policy and how it applies to you or you are unsure whether or not you may trade in a given circumstance, you should contact the President & Chief Executive Officer (“CEO”) or Chief Financial Officer (“CFO”) for assistance.

Disclosure Policy Committee

The board of directors has established a disclosure policy committee (“Committee”) responsible for overseeing the Corporation’s disclosure practices. The Committee consists of the CEO and the CFO. Other senior executives will be consulted as required.

The Committee will set benchmarks for a preliminary assessment of materiality and will determine when developments justify public disclosure. The Committee will meet as conditions dictate. It is essential that the Committee be kept fully apprised of all pending material developments relating to the Corporation in order to evaluate and discuss those events and to determine the appropriateness and timing for public release of information. If it is deemed that the information should remain confidential, the Committee will determine how that inside information will be controlled.

The Committee will review and update, if necessary, this disclosure policy on an annual basis or as needed to ensure compliance with changing regulatory requirements. The Committee will report to the board of directors as requested.

Principles of Disclosure of Material Information

Material information is any information relating to the business and affairs of the Corporation that results in, or would reasonably be expected to result in, a significant change in the market price or value of the Corporation’s securities or that would reasonably be expected to have a significant influence on a reasonable investor’s investment decisions. Material information is a broader concept than “material change” since it encompasses material facts that may not necessarily include a “material change”.

In complying with the requirement to disclose forthwith all material information under applicable laws and stock exchange rules, the Corporation will adhere to the following basic disclosure principles:

(a) Material information will be publicly disclosed immediately via news release.  Examples of types or events or information likely to be material and requiring immediate disclosure as referred to above include the following:

(i) Changes in Corporate Structure

  • Changes in share ownership that may affect control of the issuer
  • Changes in corporate structure, such as reorganization, amalgamations etc.
  • Take over bids or issuer bids

(ii) Acquisitions and Dispositions

  • Significant corporate acquisitions or dispositions of assets, property or joint venture interests
  • Acquisitions of other companies, including a take-over bid for or merger with another company

(iii) Changes in Capital Structure

  • Changes in capital structure (including public or private sale of additional securities, planned repurchases or redemption of securities, planned splits or consolidations, offerings of warrants or rights to buy shares, grants of options to officers and directors, changes to rights of security holders, initiation of a proxy dispute etc.)

(iv) Changes in Credit Arrangements

  • Borrowing or lending of a significant amount of funds (i.e. credit facilities)
  • Mortgaging or encumbering any of the company’s assets
  • defaults under debt obligations, agreements to restructure debt or planned enforcement procedures by a bank or other creditor
  • Changes in rating agency decisions
  • Significant new credit arrangements

(v) Changes in Business and Operations

  • Development of new products and developments affecting the Corporation’s resources, technology, products or markets
  • Significant new contracts, products, patents or services or significant losses of contracts or business
  • Changes in capital investment plans or corporate objectives
  • Changes to the board of directors or executive management
  • Commencement of or developments in material legal proceedings or regulatory matters
  • Disputes or disputes with major contractors or suppliers
  • Waiver of corporate ethics and conduct rules of officers, directors and key employees
  • Notice that reliance on a prior audit is no longer permissible
  • De-listing of the Corporation’s securities or movement from one quotation system or exchange to another

(vi) Changes in Financial Results

  • Significant increase or decrease in near-term earnings prospects
  • Unexpected changes in the financial results for any periods
  • Significant shifts in financial circumstances, such as cash flow reductions, major asset write-offs or write downs
  • Changes in the value or composition of the Corporation’s assets
  • Material change in the Corporation’s accounting policies

(vii) Other

  • Any other developments related to the business and affairs of the issuer that would reasonably be expected to significantly affect the market price or value of any of the issuer’s securities or that would reasonably be expected to have a significant influence on a reasonable investor’s investment decision.

The above list is not exhaustive and is not a substitute for the Corporation exercising its own judgment in making a materiality determination. An immediate statement containing the major points of the material information is the first objective. Additional details may follow in a further news release. When several significant actions are resolved or occur  at one time, disclosure of all should be released immediately so that the full implications may be assessed by the public. Certain developments will require disclosure at the proposal stage or before an event actually occurs if the proposal gives rise to material information at that stage. Announcement of an intention to proceed with a transaction or activity giving rise to material information should be made when a decision has been made to proceed by the board of directors or senior management with the expectation of concurrence from the board of directors. Updates should be announced every 30 days unless the original announcement indicated that an update would be disclosed on a specific date. In addition, prompt disclosure is required of any material change to the proposed transaction or to the previously disclosed information. While it is the responsibility of the Committee to determine what information is material in the context of the Corporation’s business, the Committee may consult with the regulation services of the applicable regulatory authority when in doubt as to whether disclosure should be made.

(b) In certain circumstances, the Committee may determine that such disclosure may be unduly detrimental to the Corporation (for example if release of the information would prejudice negotiations in a corporate transaction), in which case the information will be immediately brought to the attention of the board of directors and will be kept confidential until the Committee determines it is appropriate to publicly disclose. In such circumstances, the Committee will cause a confidential material change report to be filed with the applicable securities regulators, and will periodically (at least every 5 days) review its decision to keep the information confidential (also see “Rumours”). The Committee will only withhold material information from public disclosure where there is a reasonable basis to do so and when the basis for maintaining confidentiality ceases to exist, shall promptly disclose such material information to the public. At any time when material information is withheld from the public, the Corporation is under a duty to take precautions to keep such information completely confidential. Such information should not be disclosed to any officers, consultants, employees or advisors of the Corporation except in the necessary course of business and make sure that there is no selective disclosure of confidential information to third parties. The Corporation should ensure that when such information is disclosed in the necessary course of business all recipients are aware that it must be kept confidential. If the material information being treated as confidential becomes disclosed in some manner, the Corporation shall promptly disclose publicly in the proper manner.

(c) Disclosure must include any information, the omission of which would make the rest of the disclosure misleading (half truths are misleading).

(d) Unfavourable material information must be disclosed as promptly and completely as favourable information. The guiding principle should be to communicate clearly and accurately the nature of the information, without including unnecessary details, exaggerated reports or editorial commentary designed to colour the investment community’s perception of the announcement one way or the other. Disclosure should be factual and balanced.

(e) No selective disclosure. Previously undisclosed material information must not be disclosed to selected individuals (for example, in an interview with an analyst or in a telephone conversation with an investor). If previously undisclosed material information has been inadvertently disclosed to an analyst or any other person not bound by an express confidentiality obligation, such information must be broadly disclosed immediately via news release.

(f) Disclosure on the Corporation’s web site alone does not constitute adequate disclosure of material information.

(g) Disclosure must be corrected immediately if the Corporation subsequently learns that earlier disclosure by the Corporation contained a material error at the time it was given.

Maintaining Confidentiality

Any Policy Participant privy to confidential information is prohibited from communicating such information to anyone else, unless it is necessary to do so in the course of business. Efforts will be made to limit access to such confidential information to only those who need to know the information and such persons will be advised that the information is to be kept confidential.

Outside parties privy to undisclosed material information concerning the Corporation will be told that they must not divulge such information to anyone else, other than in the necessary course of business. Such outside parties will confirm their commitment to non-disclosure in the form of a written confidentiality agreement. In order to prevent the misuse or inadvertent disclosure of material information, the procedures set forth below should be observed at all times:

(a) Documents and files containing confidential information should be kept in a safe place to which access is restricted to individuals who “need to know” that information in the necessary course of business and code names should be used if necessary.

(b) Confidential matters should not be discussed in places where the discussion may be overheard, such as elevators, hallways, restaurants, airplanes or taxis.

(c) Confidential matters should not be discussed on wireless telephones or other wireless devices.

(d) Confidential documents should not be read or displayed in public places and should not be discarded where others can retrieve them.

(e) Employees must ensure they maintain the confidentiality of information in  their possession outside of the office as well as inside the office.

(f) Transmission of documents by electronic means, such as by fax or directly from one computer to another, should be made only where it is reasonable to believe that the transmission can be made and received under secure conditions.

(g) Unnecessary copying of confidential documents should be avoided and documents containing confidential information should be promptly removed from conference rooms and work areas after meetings have concluded. Extra copies of confidential documents should be shredded or otherwise destroyed.

(h) Access to confidential electronic data should be restricted through the use of passwords.

Designated Spokespersons

The Corporation designates a limited number of spokespersons responsible for communication with the investment community, regulators or the media. The CEO and the CFO shall be the official spokespersons for the Corporation. Individuals holding these offices may, from time to time, designate others within the Corporation to speak on behalf of the Corporation as back-ups or to respond to specific inquiries. Policy Participants who are not authorized spokespersons must not respond under any circumstances to inquiries from the investment community, the media or others, unless specifically asked to do so by an authorized spokesperson. All such inquiries shall be referred to the CEO or CFO.

News Releases

Once the Committee determines that a development is material, it will initiate the appropriate process to cause the issuance of a news release on a timely basis, unless the Committee determines that such developments must remain confidential for the time being, appropriate confidential filings are made and control of that inside information is instituted. Should a material statement inadvertently be made in a selective forum, the Corporation will immediately issue a news release in order to fully disclose that information.

Annual and interim financial results will be publicly released as soon as practicable following board approval or review, as the case may be, of the financial statements summarized in such results.  Press releases with respect to the annual and interim financial results should be reviewed and approved either by the Audit Committee or the Board prior to dissemination.  Press releases relating to the announcement of very significant events for the Corporation such as a merger or acquisition, or a major sale or contract out of the ordinary course of business, should be reviewed and approved by the Board prior to dissemination.

News releases will be disseminated through an approved news wire service that provides simultaneous national and/or international distribution. News releases will be transmitted to all stock exchange members, relevant regulatory bodies, major business wires, national financial media and, at the option of the Corporation, the local media in areas where the Corporation has its headquarters or operations.

News releases will be posted on the Corporation’s web site immediately after release over the news wire.

Rumours

The Corporation generally does not comment, affirmatively or negatively, on rumours. This also applies to rumours on the internet. The Corporation’s spokespersons will respond consistently to those rumours, saying, “It is our policy not to comment on market rumours or speculation.”

Should the stock exchange request that the Corporation make a definitive statement in response to a market rumour that is causing significant volatility in the stock, the Committee will consider the matter and decide whether to make a policy exception. If the rumour is true in whole or in part, the Corporation will immediately issue a news release disclosing the relevant material information.

Contacts with Analysts, Investors and the Media

Disclosure in individual or group meetings does not constitute adequate disclosure of information that is considered material non-public information. If the Corporation intends to announce material information at an analyst or shareholder meeting or a press conference or conference call, the announcement must be preceded by a news release.

The Corporation recognizes that meetings with analysts and significant investors are an important element of the Corporation’s investor relations program. The Corporation will meet with analysts and investors on an individual or small group basis as needed and will initiate contacts or respond to analyst and investor calls in a timely, consistent and accurate fashion in accordance with this disclosure policy.

The Corporation will provide only non-material information through individual and group meetings, in addition to regular publicly disclosed information, recognizing that an analyst or investor may construct this information into a mosaic that could result in material information.

The Corporation cannot alter the materiality of information by breaking down the information into smaller, non-material components.

The Corporation may maintain a “frequently asked questions” section on its web site and will provide the same sort of detailed, non-material information to individual investors or reporters that it has provided to analysts and institutional investors.

Spokespersons will keep notes of telephone conversations with analysts and investors and where practicable more than one Corporation representative will be present at all individual and group meetings. A debriefing will be held after such meetings and if such debriefing uncovers selective disclosure of previously undisclosed material information, the Corporation will immediately disclose such information broadly via news release.

Unintentional Selective Disclosure

Current securities legislation does not provide a safe harbour which allows a company to correct the unintentional selective disclosure of material information. If the Corporation identifies that unintentional selective disclosure has occurred, it will take immediate steps to ensure that a full public announcement is made. Such steps will include contacting the exchange on which its securities are listed or quoted and requesting that trading be halted pending the issuance of a news release and pending such issuance of the news release notifying all parties who have knowledge of the information that such information is material and that it has not been generally disclosed.

Reviewing Analyst Draft Reports and Models

It is the Corporation’s policy to review, upon request, analysts’ draft research reports or models.

The Corporation will review the report or model for the purpose of pointing out errors in fact based on publicly disclosed information. It is the Corporation’s policy, when an analyst inquires with respect to his/her estimates, to question an analysts’ assumptions if the estimate is significantly outside of the range of “Street” estimates and/or the Corporation’s published earnings guidance. The Corporation will limit its comments in responding to such inquiries to non-material information. The Corporation will not confirm, or attempt to influence, an analyst’s opinions or conclusions and will not express comfort with the analyst’s model and earning estimates.

In order to avoid appearing to “endorse” an analyst’s report or model, the Corporation will provide its comments orally or will attach a disclaimer to written comments to indicate the report was reviewed only for factual accuracy.

Distributing Analyst Reports

Analyst reports are proprietary products of the analyst’s firm. Re-circulating a report by an analyst may be viewed as an endorsement by the Corporation of the report. For these reasons, the Corporation will not provide analyst reports through any means to persons outside of the Corporation including posting such information on its web site. The Corporation may post on its web site a complete list, regardless of the recommendation, of all the investment firms and analysts who provide research coverage on the Corporation. If provided, such list will not include links to the analysts’ or any other third party web site or publications.

Forward-Looking Information

Generally, the Corporation should not disclose forward looking information (“FLI”) unless required by law to do so, or unless the Corporation believes such disclosure will enhance a reasonable investor’s investment decision, whether positively or negatively. Should the Corporation determine it has a reasonable basis and elects to disclose forward-looking information in continuous disclosure documents, speeches, conference calls, etc., the following guidelines will be observed.

(a) FLI, if deemed material, will be broadly disseminated via news release, in accordance with this disclosure policy.

(b) The FLI will be clearly identified as forward looking.

(c) The Corporation will identify all material assumptions and factors used in the preparation of the FLI.

(d) The FLI will be accompanied by a reasonable, meaningful cautionary statement that identifies, in very specific terms, the risks, uncertainties and material factors that may cause the actual results to differ materially from those projected in the statement, including a sensitivity analysis to indicate the extent to which different business conditions from the underlying assumptions may affect the actual outcome.

(e) The FLI will be accompanied by a statement that disclaims the Corporation’s intention or obligation to update or revise the FLI, whether as a result of new information, future events or otherwise. Notwithstanding this disclaimer, should subsequent events prove past statements about current trends to be materially off target, the Corporation may choose to issue a news release explaining the reasons for the difference. In this case, the Corporation will update its guidance on the anticipated impact on revenue and earnings (or other key metrics).

Managing Expectations

The Corporation will try to ensure, through its regular public dissemination of quantitative and qualitative information, that analysts’ estimates are in line with the Corporation’s own expectations. The Corporation will not confirm, or attempt to influence, an analyst’s opinions or conclusions and will not express comfort with analysts’ models and earnings estimates.

If the Corporation has determined that it will be reporting results materially below or above publicly held expectations, it will disclose this information in a news release in order to enable discussion without risk of selective disclosure.

Quiet Periods

In order to avoid the potential for selective disclosure or even the perception or appearance of selective disclosure, the Corporation will observe a quarterly quiet period, during which the Corporation will not initiate or participate in any meetings or telephone contacts with analysts and investors and no earnings guidance will be provided to anyone, other than responding to unsolicited inquiries concerning factual matters.

Disclosure Record

The CFO will maintain a five year file containing all public information about the Corporation, including continuous disclosure documents, news releases, analysts’ reports, transcripts or tape recordings of conference calls, debriefing notes, notes from meetings and telephone conversations with analysts and investors, and newspaper articles.

Responsibility for Electronic Communications

This disclosure policy also applies to electronic communications. Accordingly, officers and personnel responsible for written and oral public disclosures shall also be responsible for electronic communications.

The CFO is responsible for updating the investor relations section of the Corporation’s web site and is responsible, for monitoring all Corporation information placed on the web site to ensure it is accurate, complete, up-to-date and in compliance with relevant securities laws.

The Committee must approve all links from the Corporation web site to a third party web site. Any such links will include a notice that advises the reader that he or she is leaving the Corporation’s web site and that the Corporation is not responsible for the contents of the other site.

Investor relations material shall be contained within a separate section of the Corporation’s web site and shall include a notice that advises the reader that the information posted was accurate at the time of posting, but may be superceded by subsequent disclosures. All data posted to the web site, including text and audiovisual material, shall show the date such material was issued.

Any material changes in information must be updated immediately. The CFO will maintain a log indicating the date that material information is posted and/or removed from the investor relations web site. The minimum retention period for material corporate information on the web site shall be two years.

Disclosure on the Corporation’s web site alone does not constitute adequate disclosure of information that is considered material non-public information. Any disclosures of material information on its web site will be preceded by the issuance of a news release. The CFO shall also be responsible for responses to electronic inquiries. Only public information or information which could otherwise be disclosed in accordance with this disclosure policy shall be utilized in responding to electronic inquires.

In order to ensure that no material undisclosed information is inadvertently disclosed, Policy Participants are prohibited from participating in Internet chat rooms or newsgroup discussions on matters pertaining to the Corporation’s activities or its securities.

Liability to Investors in the Secondary Market

Ontario has enacted legislation (“Bill 198”) that gives investors in the secondary market the right to sue any public company and key related people for making public misrepresentations about the company or for failing to make timely disclosure as required by law.

Bill 198 provides secondary market investors with limited rights of action against an issuer of securities, its directors, responsible senior officers, “influential persons” (i.e. large shareholders with influence over disclosure), auditors and other responsible experts.

Secondary market investors have the right to seek limited compensation for damages suffered at a time when the issuer had made, and not corrected, public disclosure (either written or oral) that contained an untrue statement of a material fact or failed to make required material disclosure.

Investors have the right to sue whether or not they actually relied on the misrepresentation or failure to make timely disclosure.

The issuer and other possible defendants have varying defences based on the responsibility for the disclosure. For some types of disclosure, a person has a defence if that person conducted due diligence. For other types of disclosure, the person is not liable unless the plaintiff proves that the person knew about the misrepresentation, deliberately avoided acquiring knowledge or was guilty of gross misconduct in making the misrepresentation.

In order to limit potential exposure, the Committee will conduct or cause to be conducted a reasonable investigation of the disclosure to be released such that the Committee would be satisfied that there would be no reasonable grounds to believe that the document or oral statement contains any misrepresentation. Similarly the Committee will conduct or cause to be conducted a reasonable investigation to ensure that there would be no reasonable grounds to believe that a failure to make timely disclosure would occur.

Strict adherence to the Corporation’s disclosure policy will minimize exposure to potential liabilities under the Securities Act (Ontario) as amended by Bill 198.

Communication and Enforcement

This disclosure policy extends to all employees, consultants and the boards of directors of the Corporation and its subsidiaries and those individuals authorized to speak on behalf of the Corporation or its subsidiaries (previously defined as the “Policy Participants”). New directors, officers, consultants and employees will be provided with a copy of this disclosure policy and will be directed to review the disclosure policy. This disclosure policy will be circulated to all Policy Participants on an annual basis and whenever changes are made.

If you have any questions regarding the contents of this disclosure policy and how it applies to you or you are unsure whether or not you may trade in a given circumstance, you should contact the CEO or CFO for assistance.

All Policy Participants who violate this disclosure policy may face disciplinary action up to and including termination of his or her employment or relationship with the Corporation without notice. The violation of this disclosure policy may also violate certain securities laws. If it appears that a Policy Participant may have violated such securities laws, the Corporation may refer the matter to the appropriate regulatory authorities, which could lead to penalties, fines or imprisonment.