FansUnite Sells Chameleon Gaming Platform to Betr Holdings, Retaining Worldwide and Perpetual License
Vancouver, British Columbia–(Newsfile Corp. – May 9, 2023) – FansUnite Entertainment Inc. (TSX: FANS) (OTCQX: FUNFF) (“FansUnite” or the “Company“), is pleased to announce a definitive asset purchase agreement dated May 8, 2023 (the “Definitive Agreement“) pursuant to which the Company has sold (“Transaction“) the source code related to the Company’s Chameleon Gaming Platform (the “Platform”) to Betr Holdings Inc. (“Betr”) and pursuant to which FansUnite retains the use of the Platform and source code to further develop and maintain the Platform, and the ability to sell such use to another buyer in the future. Future code sales by FansUnite would not include any future enhancements made by Betr post close. The Transaction will allow the Company to further focus on growing its most profitable business units.
Chameleon Gaming Platform
Chameleon is an iGaming platform that enables companies to launch their own sports and related gambling brands or expand offerings thereunder.
FansUnite currently provides the Player Account Management (“PAM”) system for Betr’s operations, which made Chameleon an excellent fit with Betr’s long-term strategy of owning its technology platform. Betr is the micro-betting specialist sportsbook co-founded by Jake Paul, currently operating in Ohio with plans to expand throughout the U.S.
In addition, Betr has engaged 28 employees or contractors from the Company to continue work on the Platform and the parties have entered into a transition services agreement with respect to certain transition services to be provided on a post close basis.
“This is a transformational transaction for FansUnite and we are excited to move forward as a business that is a dominant player in its sector with the ability to execute on a profitable growth strategy,” said Scott Burton, CEO of FansUnite. “With the completion of this sale, we will reduce annual costs, ensuring we can execute on our strategy to generate positive cash flow this year.”
“When we entered into our multi-year agreement with Betr, we knew their long-term strategy included building or acquiring their PAM. In addition to the cash component of the deal, we will receive equity ownership in Betr, allowing us to participate in their growth while also retaining use of the current code to support existing B2B clients and the ability to further sell such use to a buyer in the future,” added Burton.
“With both the recent sales behind us, we can focus additional resources towards our highest revenue and margin businesses, such as Betting Hero and the affiliate business,” continued Scott Burton. “The Betting Hero team continues to scale as proven by their most recent success at the EGR Awards. They are a dominant operator in the live activation affiliate space, and have added two new business lines to their offering with Hero Hotline and Hero Research. Both new segments are gaining traction, and we believe they have the potential to be as successful as the primary business of Betting Hero while driving profitability for FansUnite.”
Pursuant to the terms of the Definitive Agreement, Betr will acquire the property and assets used in the Platform for total consideration of approximately CAD$10 million (the “Purchase Price“). The Purchase Price is comprised of: (i) CAD$3 million in cash paid on closing; (ii) CAD$2 million in Series A2 Preferred Shares of Betr, to be settled through warrants (each, a “Warrant“) to purchase the Series A2 Preferred Shares (the “Preferred Shares“) at a price of USD$0.01 per Preferred Share; and (iii) milestone payments of up to CAD$5 million payable over 12 months following the closing of the Transaction upon achievement of certain integration milestones, payable as to CAD$3 million in cash and as to CAD$2 million payable by way of Warrants to purchase Preferred Shares at a price of USD$0.01 per Preferred Share.
The Company will divide the net proceeds of this Transaction, and its recently announced sale of its wholly-owned subsidiary, McBookie Ltd., with a portion to be allocated to pay money owed to Centurion Financial Trust, an investment trust formed by Centurion Asset Management Inc., pursuant to the loan (the “Loan”) announced in the Company’s September 19, 2022 news release. It is expected that the Loan amount will be reduced by approximately CAD$5.5m.
Tekkorp Capital Advisors acts as a strategic advisor to the Company.
DLA Piper LLP acted as legal advisor to FansUnite and Bennett Jones LLP acted as legal advisor to Betr.
About FansUnite Entertainment Inc.
FansUnite is a global sports entertainment and gaming company. Our business is focused on the regulated and lawful sports betting and iGaming market which includes sports betting, customer acquisition, retention, support and reactivation. FansUnite has established itself as a leader in the North American affiliate market through its subsidiary American Affiliate Co LLC (“AmAff” or “American Affiliate”). AmAff is a North American omni-channel customer acquisition company, covering both retail and digital customer activation for sportsbooks, casinos, poker and fantasy sports platforms.
For further information, please contact:
Prit Singh, Investor Relations
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, statements with respect to: the Definitive Agreement; the Transaction, including the Purchase Price payable, any future working capital adjustments, as well as any milestone payments; the actual allocation of net proceeds to be used to pay back in part, the Loan, and to working capital; total number of warrants to be received as partial consideration; FansUnite’s ability to fulfill technology needs with its platform; the Company’s unique portfolio of assets; discussion of future plans, projections, objectives, estimates and forecasts and the timing related thereto, including acquiring technology platforms and assets with high growth potential in new or developing markets, as well as re-focusing its efforts to generate a positive cash flow this year, and further use and development of the source code of the Platform; future services to be provided under the transition services agreement; actual reduction in costs due to the Transaction; and future growth of Betr, and any increase in the value of the Company’s equity therein as a result.
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; 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; risks associated with the Transaction; risks associated with the Definitive Agreement; risks associated with the regulatory environments in the jurisdictions the Company and the Target operate in; technology-related risks that could adversely effect 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. Additional information regarding the risks and uncertainties relating to the Company’s business are contained under the heading “Risk Factors” in the Company’s Annual Information Form dated, March 30, 2023 as filed on its issuer profile on SEDAR at www.sedar.com. Accordingly, readers should not place undue reliance on forward-looking statements. the forward-looking statements in this news release are made as of the date of this news release. FansUnite disclaims and does not undertake to update or revise any forward-looking statements, whether written or oral, that may be made from time to time, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.