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