FansUnite Reports Full Year 2022 Financial Results
- Total revenue of $27.30 million for the full year of Fiscal 2022, an increase of 387% over the same period in Fiscal 2021
- Gross margin of $14.85 million (54%) for Fiscal 2022 as compared to $2.88 million (51%) for Fiscal 2021
- Company to host Year End earnings call on Friday, March 31, 2023 at 10:00 AM EST/7:00 AM PST
Vancouver, British Columbia–(March 30, 2023) – FansUnite Entertainment Inc. (TSX: FANS) (OTCQX: FUNFF) (“FansUnite” or the “Company”) announced that it has filed its consolidated audited financial statements and associated management’s discussion and analysis (“MD&A”) for the full financial year ended December 31, 2022 (“Fiscal 2022”). All amounts are stated in Canadian dollars unless otherwise indicated.
Earnings Call Registration Details
Day: Friday, March 31, 2023
Time: 10:00 AM (EST) / 7:00 AM (PST)
Topic: FansUnite’s Fiscal 2022 financial results and growth outlook for the remainder of 2023
Register: https://us02web.zoom.us/webinar/register/WN_NxfcPfWGS3KIXxm9NYX0kg
Fiscal 2022 Financial Highlights:
- Total revenue of $27.30 million, an increase of approximately 387% over 2021
- Gross margin of $14.85 million (54%) as compared to $2.88 million (51%) for 2021
- Adjusted EBITDA loss of $8.67 million, as compared to $10.06 million in 2021
Fourth Quarter Fiscal 2022 Operational Highlights
- On October 5, 2022, FansUnite announced that the Company obtained the GLI-33 Event Wagering Systems certification from Gaming Laboratories International (GLI ®) for its Chameleon iGaming Platform software as a service (“SaaS”) sportsbook solution.
- On October 6, 2022, FansUnite appointed gaming expert Quinton Singleton as a member of the Company’s Board of Directors to advance its North American expansion strategy.
- On December 15, 2022, FansUnite announced that the Ohio Casino Control Commission has granted the Company a Sports Gaming Supplier License for its Chameleon iGaming platform in the state of Ohio in connection with sports micro-betting brand betr’s launch on January 1, 2023.
Subsequent Events to Fiscal 2022:
- On January 18, 2023, FansUnite reported that its subsidiary McBookie Ltd produced an increase in its annual turnover in 2022, across its sports betting and casino channels, to £44.8 million as compared to £36.6 million in 2021, an increase of 22% while gross win across both channels increased by 44% to £2.35 million from £1.63 million.
- On February 2, 2023, FansUnite announced that the Company’s customer acquisition, retention, and development brand, Betting Hero, has been shortlisted as finalists for the following five award categories in the 2023 iGB Affiliate Awards:
- Best Sports Betting Affiliate
- Best Casino Affiliate
- Rising Star
- Innovation Award
- Affiliate Employer of the Year
- On February 9, 2023, FansUnite announced a transaction that will result in Stram Entertainment Limited, d.b.a. BestOdds, acquiring one of the Company’s affiliate brands, BetPrep. As part of the agreement, BestOdds will pay FansUnite a 30% revenue share for 36 months (subject to a minimum monthly guarantee), after the agreed upon ramp-up period ends on September 1, 2023.
- On February 27, 2023, FansUnite reported that Betting Hero registered more than 6,700 new depositing customers for its sportsbook partners, setting a new Company record for new depositing customers in a four-day period during the Super Bowl LVII weekend.
- On March 14, 2023, FansUnite announced that the Company and Betting Hero were shortlisted as finalists for the following six award categories in the 2023 EGR North America Awards:
- Sportsbook Platform Provider of the Year
- Affiliate of the Year
- Employer of the Year
- Diversity & Inclusion Model of the Year
- Acquisition & Retention Partner of the Year
- Customer Onboarding Partner of the Year
- On March 16, 2023, FansUnite completed a $3.04 million non-brokered private placement (the “Offering”) led by Tekkorp Capital and affiliates (“Tekkorp”), an investment firm that advises and invests in innovative public and private companies within the global digital gaming industry, in which a total of $1.4 million were invested into FansUnite by both Tekkorp and FansUnite’s insiders and management.
“We are pleased to report significant year-over-year revenue growth in Fiscal 2022, as highlighted by our total revenue of $27.30 million, an increase of 387% as compared to the last fiscal year while operating at a gross margin of 54%,” said Scott Burton, CEO of FansUnite. “The increase in our revenue was primarily driven by the affiliate operations of Betting Hero which continued to reach operational milestones by entering new U.S. betting jurisdictions and demonstrating strong results during major sporting events throughout the year. In addition, we also saw substantial growth in our B2C and B2B operations as a result of the recent FIFA World Cup and the commercialization of our white-label B2B solutions.”
Mr. Burton added, “Our focus for the remainder of 2023 is to continue our strategy of scaling our existing business units that are performing well. We will continue to identify areas in our company where we can improve operational and financial efficiency in order to reach cash flow breakeven in the near future.”
Additionally, the Company announces that it is proposing to reduce the exercise price of 14,701,785 common share purchase warrants (the “Warrants”) issued on September 19, 2023 to Centurion Financial Trust and two other syndicated lenders in connection with a secured non-convertible debenture for a commitment of up to C$12,350,000. Each Warrant entitles the holder to purchase one common share of the Company for a period of three years from the date of issuance at an exercise price of $0.14. In order to align the exercise price of the Warrants with the warrants issued under the Offering, the Company has applied to the TSX to lower the exercise price of the Warrants from $0.14 to $0.12 (the “Warrant Repricing”), being the same exercise price for the warrants issued in connection with the Offering. All other terms and conditions of the Warrants remain unchanged.
The Warrant Repricing will become effective on April 17, 2023 and will be subject to the final approval of the TSX.
About FansUnite Entertainment Inc.
FansUnite is a global sports and entertainment company, focusing on technology related to regulated and l online gaming. FansUnite’s one-of-a-kind iGaming platform Chameleon offers operators a full suite of gaming solutions with a sports and esports focus geared for the next generation of online bettors and casino players. Along with providing B2B technology solutions, FansUnite operates multiple B2C brands, such as Scottish sportsbook McBookie. FansUnite is the parent company of North American-focused AmAff, which operates leading affiliate brands such as Betting Hero and Props.com.
FORWARD-LOOKING INFORMATION:
This news release contains certain statements that may constitute forward-looking information under applicable securities laws. All statements, other than those of historical fact, which address activities, events, outcomes, results, developments, performance or achievements that FansUnite anticipates or expects may or will occur in the future (in whole or in part) should be considered forward-looking information. Often, but not always, forward-looking information can be identified by the use of words such as “plans”, “expects”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and phrases, or statements formed in the future tense or indicating that certain actions, events or results “may”, “could”, “would”, “might” or “will” (or other variations of the forgoing) be taken, occur, be achieved, or come to pass. Forward-looking statements in this news release include, but are not limited to, the Company’s strategic objectives, goals, growth strategy and focus including growing revenue and reaching cash flow breakeven; the closing of the acquisition of BetPrep by Stram Entertainment Inc. (d.b.a. BestOdds), and the payment by BestOdds of a revenue share to the Company; the application and receipt of regulatory approval with respect to the Warrant Repricing and the timing thereof.
Forward-looking statements are based on assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, including, but not limited to, expectations and assumptions concerning: interest and foreign exchange rates; capital efficiencies, cost saving and synergies; growth and growth rates; the success in the online gambling and sports betting industry; the regulatory environment applicable to online gambling and sports betting; the technological infrastructure and support needed to host the Company’s online gambling and sports betting platforms and applications; any cryptocurrency applications to the Company’s business; and the Company’s growth plan. While FansUnite considers these assumptions to be reasonable, based on information currently available, they may prove to be incorrect. Readers are cautioned not to place undue reliance on forward-looking statements. In addition, forward-looking statements necessarily involve known and unknown risks, including, without limitation, risks associated with general economic conditions; audit-risks; risks associated with the regulatory environments in the jurisdictions the Company operates in; technology-related risks that could adversely affect the Company’s ability to operate its online gambling and sports betting platforms and applications, risks related to the novel coronavirus (COVID-19) global pandemic and any effects it might have on the Company’s business thereto. Readers are cautioned that the foregoing list is not exhaustive. For more information on the risk, uncertainties and assumptions that could cause anticipated opportunities and actual results to differ materially, please refer to the public filings of FansUnite which are available on SEDAR at www.sedar.com. Readers are further cautioned not to place undue reliance on forward-looking statements as there can be no assurance that the plans, intentions or expectations upon which they are placed will occur. Such information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those anticipated. Forward-looking statements contained in this news release are expressly qualified by this cautionary statement and reflect our expectations as of the date hereof, and thus are subject to change thereafter. FansUnite disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.
NON-IFRS FINANCIAL MEASURES:
This news release refers to certain non-International Financial Reporting Standards (“IFRS”) measures. Adjusted EBITDA is not a recognized performance measure under IFRS. Adjusted EBITDA does not have a standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. Adjusted EBITDA is calculated as earnings before interest expense, interest income, income taxes, depreciation and amortization, share based payments expense and nonrecurring impact transactions, if any. Adjusted EBITDA is included as supplemental disclosure because management believes that such measurement is useful to useful to securities analysts, investors and other interested parties in evaluating operating performance by presenting the results of the Company which excludes the impact of certain non-operational items and certain non-cash and nonrecurring items, such as share based payment expense. The most directly comparable measure to Adjusted EBITDA calculated in accordance with IFRS is net income (loss). Readers are cautioned that these measures should not be construed as an alternative to measures determined in accordance with IFRS as an indication of the Company’s performance.
|
(CAD – thousands) |
Notes |
|
December 31, 2022 $ |
|
December 31, 2021 $ |
|
Assets |
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Cash and cash equivalents |
3 |
|
2,914 |
|
13,974 |
|
Restricted cash |
3 |
|
646 |
|
205 |
|
Short-term investments |
|
|
– |
|
919 |
|
Receivables |
4 |
|
4,711 |
|
6,803 |
|
Due from related parties |
14 |
|
376 |
|
78 |
|
Prepaid expenses |
5 |
|
230 |
|
336 |
|
Total current assets |
|
|
8,877 |
|
22,315 |
|
|
|
|
|
|
|
|
Non-current |
|
|
|
|
|
|
Equipment |
7 |
|
67 |
|
60 |
|
Goodwill |
10 |
|
20,664 |
|
85,486 |
|
Intangible assets |
8 |
|
47,391 |
|
69,761 |
|
Digital currencies |
9 |
|
32 |
|
107 |
|
Right of use assets |
7 |
|
359 |
|
108 |
|
Deferred tax asset |
22 |
|
– |
|
30 |
|
Long-term investments |
21 |
|
63 |
|
77 |
|
Total Assets |
|
|
77,453 |
|
177,944 |
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Current |
|
|
|
|
|
|
Accounts payable and accrued liabilities |
6 |
|
4,539 |
|
7,157 |
|
Due to related parties |
14 |
|
74 |
|
165 |
|
Bank indebtedness |
13 |
|
8,233 |
|
– |
|
Deferred and contingent consideration |
11 |
|
12,138 |
|
22,158 |
|
Lease liability |
12 |
|
186 |
|
71 |
|
Total current liabilities |
|
|
25,170 |
|
29,551 |
|
|
|
|
|
|
|
|
Non-current |
|
|
|
|
|
|
Deferred and contingent consideration |
11 |
|
8,688 |
|
65,069 |
|
Deferred Tax Liability |
|
|
459 |
|
– |
|
Lease liability |
12 |
|
153 |
|
39 |
|
Total liabilities |
|
|
34,470 |
|
94,659 |
|
|
|
|
|
|
|
|
Shareholders’ Equity |
|
|
|
|
|
|
Share capital |
16 |
|
121,208 |
|
110,370 |
|
Reserves |
|
|
16,567 |
|
9,978 |
|
Accumulated other comprehensive income |
|
|
3,750 |
|
209 |
|
Deficit |
|
|
(98,542) |
|
(37,272) |
|
Total Shareholders’ Equity |
|
|
42,983 |
|
83,285 |
|
Total Liabilities and Shareholders’ Equity |
|
|
77,453 |
|
177,944 |
|
For the years ended (CAD – thousands) |
Notes |
|
December 31, 2022 $ |
|
December 31, 2021 $ |
|
|
|
|
|
|
|
|
Revenue |
18 |
|
27,301 |
|
5,603 |
|
Cost of revenue |
18 |
|
12,454 |
|
2,724 |
|
Gross Margin |
|
|
14,847 |
|
2,879 |
|
|
|
|
|
|
|
|
Expenses |
|
|
|
|
|
|
Selling, general and administrative |
19 |
|
52,930 |
|
19,253 |
|
Loss before other items |
|
|
(38,083) |
|
(16,374) |
|
|
|
|
|
|
|
|
Other items |
|
|
|
|
|
|
Interest and other expenses (income), net |
19 |
|
11,020 |
|
1,360 |
|
Impairment loss |
8, 10 |
|
71,658 |
|
– |
|
Revaluation of contingent consideration |
11 |
|
(60,640) |
|
– |
|
Income tax expense (recovery): |
|
|
|
|
|
|
Current |
22 |
|
44 |
|
165 |
|
Deferred, net |
22 |
|
1,103 |
|
(850) |
|
Net loss for the year |
|
|
(61,268) |
|
(17,049) |
|
|
|
|
|
|
|
|
Other comprehensive income |
|
|
|
|
|
|
Revaluation on digital currencies |
9 |
|
(66) |
|
89 |
|
Currency translation adjustment |
|
|
3,607 |
|
92 |
|
Total comprehensive loss |
|
|
(57,727) |
|
(16,868) |
|
|
|
|
|
|
|
|
Loss per share – basic and diluted |
|
|
(0.20) |
|
(0.08) |
|
Weighted average number of common: |
|
|
|
|
|
|
shares outstanding – basic |
|
|
309,637,689 |
|
200,121,900 |
|
(CAD – thousands) |
Notes |
|
December 31, 2022 $ |
|
December 31, 2021 $ |
|
Operating Activities: |
|
|
|
|
|
|
Net loss |
|
|
(61,268) |
|
(17,049) |
|
Restricted cash |
|
|
(441) |
|
(205) |
|
Adjustments for non-cash items: |
|
|
|
|
|
|
Depreciation of equipment |
7 |
|
195 |
|
75 |
|
Amortization of intangible assets |
8 |
|
21,081 |
|
3,902 |
|
Impairment loss |
8, 10 |
|
71,658 |
|
– |
|
Accretion on liabilities |
11 |
|
10,585 |
|
1,360 |
|
Revaluation gain on contingent consideration |
11 |
|
(60,640) |
|
– |
|
Loss on asset sale |
|
|
175 |
|
– |
|
Conversion of subscription receipt liability |
|
|
– |
|
(778) |
|
General & administrative expenses paid with common shares |
|
|
524 |
|
– |
|
Marketing expenses paid with digital currencies |
|
|
10 |
|
4 |
|
Unrealized fair value loss on investments |
|
|
154 |
|
45 |
|
Share-based payments |
17 |
|
6,693 |
|
2,248 |
|
Interest and other income, net |
|
|
276 |
|
18 |
|
Deferred tax recovery |
22 |
|
1,103 |
|
(850) |
|
|
|
|
|
|
|
|
Changes in non-cash working capital |
23 |
|
3,162 |
|
3,074 |
|
|
|
|
|
|
|
|
Net cash flows used in operating activities |
|
|
(6,733) |
|
(8,156) |
|
|
|
|
|
|
|
|
Investing Activities |
|
|
|
|
|
|
Payment of contingent consideration |
11 |
|
(9,017) |
|
– |
|
Payment of net working capital adjustment |
|
|
(3,650) |
|
– |
|
Purchase of intangibles |
8 |
|
(14) |
|
– |
|
Proceeds on sale of investments |
|
|
843 |
|
– |
|
Purchase of equipment |
7 |
|
(56) |
|
(76) |
|
Net cash flows used in investing activities |
|
|
(11,894) |
|
(76) |
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
Repayment of lease liability |
12 |
|
(191) |
|
(49) |
|
Funds used in acquisition of American Affiliate |
|
|
– |
|
(19,786) |
|
Proceeds from brokered financing |
|
|
– |
|
35,004 |
|
Proceeds from warrant/option exercise |
|
|
73 |
|
3,209 |
|
Repurchase of shares |
|
|
(59) |
|
– |
|
Proceeds from bank indebtedness |
13 |
|
8,233 |
|
– |
|
Interest income, net |
13 |
|
(252) |
|
– |
|
Repayment of notes and loans payable |
|
|
– |
|
(602) |
|
Payments to related parties |
|
|
(386) |
|
(78) |
|
Net cash flows provided by financing activities |
|
|
7,418 |
|
17,698 |
|
|
|
|
|
|
|
|
Effect of foreign exchange |
|
|
149 |
|
77 |
|
|
|
|
|
|
|
|
Change in cash |
|
|
(11,060) |
|
9,543 |
|
Cash, beginning of the period |
|
|
13,974 |
|
4,431 |
|
Cash, end of period |
|
|
2,914 |
|
13,974 |