Mr. Scott Burton reports

FANSUNITE REPORTS FIRST QUARTER 2023 FINANCIAL RESULTS

Fansunite Entertainment Inc. has filed its condensed consolidated interim financial statements and associated management's discussion and analysis (MD&A) for the three months ended March 31, 2023. All amounts are stated in Canadian dollars unless otherwise indicated.

Q1 fiscal 2023 earnings call details

Day:  Tuesday, May 16, 2023

Time:  10 a.m. EST (7 a.m. PST)

Topic:  Fansunite's Q1 fiscal 2023 financial results and growth outlook for the remainder of 2023

Please register on-line for the earnings call.

First quarter fiscal 2023 financial highlights:

• Total revenue of $8.73-million, a decrease of approximately 11 per cent over the same period in fiscal 2022;
• Gross margin of $5.41-million (62 per cent), as compared with $5.90-million (61 per cent) over the same period in fiscal 2022;
• Net loss of $6.15-million in Q1 fiscal 2023, which includes non-cash expenses of $6.39-million, as compared with $9.17-million over the same period in fiscal 2022, which includes non-cash expenses of $10.31-million;
• Unrestricted cash increased to $5.18-million as of March 31, 2023, as compared with $2.91-million on Dec. 31, 2022;
• As of March 31, 2023, the company had a net working capital of $5.90-million, as compared with negative $4.16-million as of Dec. 31, 2022.

First quarter fiscal 2023 operational highlights:

• On Feb. 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 Feb. 9, 2023, Fansunite announced a transaction that will result in Stram Entertainment Ltd., doing business as BestOdds, acquiring one of the company's affiliate brands, BetPrep. As part of the transaction, BestOdds will pay Fansunite a 30-per-cent revenue share for 36 months (subject to a minimum monthly guarantee), after the agreed upon ramp-up period ends on Sept. 1, 2023.
• On Feb. 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 (and won three on May 1, 2023):
  • Sportsbook platform provider of the year;
  • Affiliate of the year;
  • Employer of the year (winner);
  • Diversity and inclusion model of the year;
  • Acquisition and retention partner of the year (winner);
  • Customer onboarding partner of the year (winner).
• On March 16, 2023, Fansunite completed a $3.04-million non-brokered private placement offering led by Tekkorp Capital (and affiliates), 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 was invested into Fansunite by both Tekkorp and Fansunite's insiders and management.

"The work we began in 2022 to reduce costs and streamline operations are being reflected in our results," said Scott Burton, chief executive officer of Fansunite. "The first quarter of 2023 saw an increase in gross margin to 62 per cent, a decrease in net loss to $6.4-million as compared to $9.2-million in Q1 of the prior year while we generated positive cash flow from our operations. Additionally, we reached multiple strategic milestones, including the sale of one of our affiliate brands, BetPrep, to achieve cost savings and reallocate our resources to other high-revenue segments, as well as the company obtaining a prominent strategic investor, Tekkorp Capital, in our recent financing."

Subsequent events to first quarter fiscal 2023:

• On May 1, 2023, Fansunite signed a definitive agreement pursuant to which the company sold to an arm's-length third party all of the shares in its wholly owned subsidiary, McBookie Ltd.
• On May 8, 2023, Fansunite sold the source code related to the company's Chameleon gaming platform to Betr Holdings Inc. and retained the use of the platform and 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 following the closing of the transaction. The transaction terms included total consideration of approximately $10-million, comprising:
  • $3-million in cash paid on closing;
  • $2-million in Series A2 preferred shares of Betr, to be settled through warrants to purchase the preferred shares at a price of one U.S. cent per preferred share;
  • Milestone payments of up to $5-million, payable over 12 months following the closing of the transaction upon achievement of certain integration milestones, payable as to $3-million in cash and as to $2-million payable by way of warrants to purchase preferred shares at a price of one U.S. cent per preferred share.
• The net proceeds of the transaction and the sale of McBookie were divided with a portion allocated to pay money owed to Centurion Financial Trust, an investment trust formed by Centurion Asset Management Inc., pursuant to the loan announced in the company's Sept. 19, 2022, news release. The loan amount was reduced by approximately $5.5-million.

Growth outlook

The company will continue to expand its affiliate operations into new markets in accordance with its sportsbook partners' operations. In addition, Betting Hero aims to diversify its revenue streams and provide additional service offerings through its Hero Research and Hero Hotline services.

Fansunite will also continue to assess and streamline various business units to maximize cost-efficiency and improve overall revenue growth. This has resulted in the sales of strategic assets such as BetPrep, McBookie and the recently announced Chameleon gaming platform source code.

Mr. Burton added: "We are going to continue our focus on growing our high-margin and profitable U.S.-affiliate-centric businesses, primarily Betting Hero and its new divisions. The affiliate side of our business has continued to produce substantial revenues while having a strong foothold in the affiliate business. The focus moving forward will be to execute on new revenue opportunities while driving improved margins and positioning Fansunite as a business that generates significant cash flow in the global gaming market."

About Fansunite Entertainment Inc.

Fansunite is a global sports entertainment and gaming company, focused on the regulated and lawful sports betting affiliate market, which includes 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). AmAff is a North American omnichannel customer acquisition company, covering both retail and digital customer activation for sportsbooks, casinos, poker and fantasy sports platforms.

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